While the KPW-USD exchange rate in North Korean markets recently fell slightly, the yuan is strengthening as expectations rise about expanding trade with China.
According to Daily NK’s regular survey of market prices in North Korea, the dollar was trading at KPW 8,280 at one market in Pyongyang as of Dec. 24, 2.6% less than in the previous survey on Dec. 10.
Similar declines were also confirmed in Sinuiju and Hyesan. In Sinuiju, the dollar was trading at KPW 8,350 as of Dec. 24, 2.2% less than two weeks earlier.
The dollar’s recent weakness in North Korean markets appears partially due to the dollar’s weakening in international currency markets.
With the US Federal Reserve hinting at a possible interest rate cut, the dollar fell to 101.47 on the US Dollar Index (DXY) — which shows the dollar’s value against six nations’ currencies — as of Dec. 26.
However, an ongoing review of trade agencies by the North Korean Ministry of External Economic Relationsn has been a more significant factor in weakening the dollar in North Korea.
Daily NK reported (article in Korean) in late December that North Korean authorities recently began structural adjustments of the country’s trade sector, calling out trading companies that have failed to achieve the state’s trade targets and replacing or punishing the managers of those companies.
The Ministry of External Economic Relations is reissuing trade certificates, or waku, alongside the reviews, so major trading companies have been preparing for an expansion in trade in 2024 rather than jumping into import-export activities right away. This may have led to a slight fall in demand for dollars.
On the other hand, the yuan recently grew stronger in North Korean markets. The yuan was trading at KPW 1,230 in Pyongyang as of Dec. 24, 2.5% higher than it was trading at on Dec. 10.
The yuan also strengthened at similar levels elsewhere in the country. In one market in Hyesan, the yuan was trading at KPW 1,240, 2.5% higher than two weeks earlier.
In early December, foreigners and some privately-run cargo carriers began transiting through customs houses in Hoeryong and Hyesan. This has led to growing expectations that private trade will expand in early 2024.
As a result, demand for yuan has risen slightly in areas along the border. Major trading companies usually conduct their transactions in dollars, while regional trading companies prefer yuan.
“People think private trade will expand in even provincial areas after Jan. 1,” a source in Yanggang Province said, speaking on condition of anonymity for security reasons. “This suggests that the yuan will strengthen once trade expands.”
Translated by David Black. Edited by Robert Lauler.
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January 05, 2024 at 03:36AM
by DailyNK(North Korean Media)