North Korea’s market exchange rates have soared to unprecedented levels. After stabilizing for two months following a peak in early September, the US dollar to North Korean won rate has surged by over 10%, causing turmoil in the marketplace.
According to Daily NK’s regular survey of market prices in North Korea, the greenback was trading at 18,100 won in a particular market in Pyongyang on Nov. 10, 13.1% higher than it was in the previous survey two weeks earlier on Oct. 27, when it was trading at 16,000 won.
The latest rate is 2.18 times higher than on Jan. 7, when the dollar was trading at 8,300 won in Pyongyang. This is the first time the market rate for the dollar has more than doubled inside a year since North Korea’s 2009 currency reform.
Exchange rates in other regions exhibited similar spikes as Pyongyang, with the sharpest climb in Hyesan, Ryanggang province.
The dollar was trading at 18,400 won in a certain market in Hyesan on Nov. 10, a 14.3% jump from Oct. 27, when it was trading at 16,100 won. This was the highest rate for the dollar since the 2009 currency reform.
According to Daily NK’s database on North Korean exchange rates, there was a 7,900 won gap between the won-dollar rate’s high and low for 2024. Never has such a large gap in the yearly high and low been posted in the last 10 years since 2014.
There was a 3,700 won gap between early 2022, when trade expectations collapsed in the wake of North Korea’s border closure due to COVID-19, and late 2022, when trade began to recover. The difference was far smaller than this year.
Yuan also surges against the won
The market won-yuan rate similarly climbed more than 10% over two weeks.
Like the dollar rate, the yuan rate was highest in Hyesan. In one market in Hyesan, the yuan was trading at 2,380 won on Nov. 10, 14.4% higher than on Oct. 27.
The won-yuan rate climbed most sharply in Sinuiju, North Pyongan province. Chinese currency was trading at 2,300 won on Nov. 10, 15% higher than on Oct. 27, when it was trading at 2,000 won.
This was the first time the yuan had crossed the 2,300 won threshold since Daily NK began surveying North Korean market prices in 2009.
The 10% or more jump in North Korea’s market exchange rates results from external factors — namely, the strengthening of the dollar in international financial markets — and internal factors, with demand for foreign currency rising as public use of the dollar and yuan grows.
Businesspeople turn away from North Korean won
Meanwhile, with the market exchange rates for the dollar and yuan skyrocketing, market merchants often refuse to sell items for local currency.
“With the dollar climbing by 1,000 won and the yuan by 100 or 200 won a day, if business people sell something for 2,000 won today, they’ll take a loss when the exchange rate climbs the next day,” the source said. “Since people take losses if they sell items in won, they avoid selling things for local currency when they can.”
Business people often favor payments in dollars or yuan, leading to an increased use of foreign currencies in transactions.
The recent increase in the exchange rate is expected to lead to higher prices for imported and domestically produced goods, including staples such as rice and corn, as well as local industrial products. This is attributed to the likelihood of a reduced supply of imported grain and raw materials due to the escalating exchange rate.
“Almost everything is imported, and almost all items are connected to imports, so if the exchange rate climbs, the prices of all items in markets rise,” the source said. “People who don’t engage in commerce or smuggling and never touch foreign money have a real tough time nowadays.”
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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November 21, 2024 at 05:30AM
by DailyNK(North Korean Media)