The North Korean won has plunged in value, driving exchange rates for U.S. dollars and Chinese yuan to record highs. In response, North Koreans are increasingly turning to commodity exchanges rather than using their local currency.
According to multiple Daily NK sources, money changers and merchants are refusing to accept North Korean won for foreign currency or imported goods, expecting further devaluation. Instead, people are trading commodities like rice, cooking oil, and fuel for foreign currency.
“Almost nobody exchanges local money for dollars anymore,” reported a source in South Pyongan province recently. “People are buying small amounts of dollars with rice instead.” The current exchange rate is approximately 2 to 2.5 kilograms of rice per dollar. For larger transactions, traders prefer higher-value commodities like cooking oil or fuel, as rice is too bulky for large-scale trading.”
The currency crisis has affected farmer payments as well. Farmers typically receive an annual “settlement share” – a combination of goods and cash based on their work contribution. Recently, farms have been forced to increase the cash portion of these payments as the won loses value. In Sukchon county, South Pyongan province, one farm paid its entire settlement in cash last month, but farmers were disappointed as goods have become more valuable than money.
The economic hardship is particularly severe for North Koreans without access to foreign currency. Those who rely on selling homegrown vegetables or homemade food in unofficial markets are struggling to survive. “Food-poor families are noticeably growing,” the source said. “While border regions near China where people can earn foreign currency are managing better, more people in interior regions are subsisting on rice or gruel.”
However, experts believe this shift toward foreign currency may soon reach its limits. Moon Sung-min, a North Korean studies scholar and former head of the North Korea Research Division at the Bank of Korea’s Economic Research Institute, explains that the limited supply of dollars and yuan in North Korea will naturally constrain their circulation.
“Foreign currency alone can’t facilitate small transactions or provide change for everyday purchases,” Moon said. “Additionally, as prices rise to match climbing exchange rates, the trend toward dollarization will likely slow down.”
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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December 17, 2024 at 07:06AM
by DailyNK(North Korean Media)