Daily NK recently obtained a document distributed by North Korean authorities on Sept. 20 that stresses that “the fate of the nation depends on the stabilization of the exchange rates.” The nine-page document, titled “Regarding everyone actively participating in activities to stabilize the exchange rate with higher civic awareness,” outlines the importance of exchange rate stability and related economic policies, but offers few concrete measures to actually lower the exchange rate.
The document repeats the phrase “connect this with the concrete tasks of your workplace,” suggesting that the document was written as reference material for party officials or local government officials when explaining economic measures to the general public.
First, the North Korean authorities blamed the sharp rise in exchange rates on unfounded rumors and psychological unease. It said that unfounded rumors that the value of North Korea’s domestic currency would continue to fall while the value of foreign currency rose had caused demand for foreign currency by some businesses and individuals to soar. It called for a “thorough eradication of the phenomenon of buying and saving more foreign currency than one needs on the basis of unfounded rumors that the exchange rate will continue to rise.”
The North Korean authorities also warned that people must not distribute cash outside state control through black market foreign exchange transactions and the like. Specifically, it ordered that “all workplaces and citizens unconditionally adhere to the official exchange rate of 8,900 North Korean won to the dollar when distributing cash.” To do this, officials must “set up firm reporting systems so that money changers will not even consider exchanging money at rates higher than the official exchange rate.”
The materials instructed law enforcement and other control agencies to “sternly punish those who damage the stability of exchange rates by trading foreign exchange outside state control or spreading groundless rumors, regardless of the circumstances.” Specifically, it ordered the confiscation of cash and goods from people who exchange foreign currency or conduct foreign currency transactions at rates higher than the official rate, and to “increase the intensity of the legal struggle” against offenders “to the end” through repeated public struggle sessions.
North Korean authorities have issued strict economic directives, mandating state-controlled goods distribution, enforcing state-approved pricing, prohibiting unauthorized use of state entities for profit, and promoting electronic payment systems. Additionally, the government has introduced new measures aimed at stabilizing the exchange rate, signaling a comprehensive approach to economic control.
These included allowing all banks to make cash transfers when necessary for payments between agencies and enterprises, where previously vouchers were the norm; giving preferential treatment to the use of electronic payments; selling 15 basic necessities such as toothpaste, toothbrushes, and soap in the service sector at state-approved prices; issuing manager-signed receipts when agencies or enterprises purchase items in transactions with individuals; selling light industrial goods directly through the state-run commercial network; and allowing the exchange of foreign currency for local currency between enterprises and in the people’s economy sector.
Meanwhile, people who have undergone ideological indoctrination regarding these new economic policies are protesting that the measures are aimed at suppressing the people’s economic activities.
They say that it is pointless to introduce these policies now when the market exchange rate is already almost double the official rate, and that they will only hurt people who depend on trade for their livelihood.
According to Daily NK’s regular survey of North Korean market prices, the average exchange rate for the dollar in Pyongyang, Sinuiju and Hyesan as of Sept. 15 was 16,150 won, or 1.8 times the official rate of 8,900 won. People do not use the official rate because they would lose money, and many people do not even know the official rate exists.
“The document’s guidelines, if implemented, could lead to the confiscation of all goods and money currently being traded,” a source explained. “Many people are expressing serious concerns about these potential consequences.”
The Daily NK works with a network of sources in North Korea, China, and elsewhere. For security reasons, their identities remain anonymous.
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September 30, 2024 at 12:00PM
by DailyNK(North Korean Media)