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| NORTH KOREA SWAPS CURRENCY |
| Posted Date : 2009-12-04 (NK Brief No.09-12-4-1) |
At 8:00 A.M. on December 2, North Korea began transferring to a new currency throughout the country. According to Daily NK, the order to exchange currency was issued without explanation, as each regional branch of the Korea Central Bank began exchanging notes from 8:00 in the morning. ‘Good Friends’, ‘North Korea Intellectuals Solidarity’, and other defector organizations are reporting that the North is in the process of changing its currency.
North Korean officials first notified residents of the money swap on November 30. Citizens were advised that old notes were to be traded for new money, but there was significant resistance and locals refused, leading officials to issue a new order to exchange currency. The order stipulated that the exchange be carried out at ‘100 to 1’ and that for any family exchanging more than KPW 100,000, any additional monies are to be exchanged at a rate of 1000 to 1. Any remaining currency is to be deposited in the bank, and will be re-issued in new notes at a later date.
If anyone actually has as much as a million won in cash, they would be able to transfer the first hundred thousand into one thousand won of the new currency, and the next hundred thousand would be worth a mere 100 won. The remaining 800 thousand won of savings would have to be turned over to the bank on the promise that it would be accessible at some time in the future at an exchange rate that has not yet been determined. This has been met with considerable controversy within North Korean society.
On November 3, 1992, as the North went through a currency reform, old money was exchanged for new on a 1-to-1 basis, and on a standard of 300 won-per-family. Up to 200 thousand won could be deposited as savings in a local bank, but one month later it was announced that each family could withdraw no more than four thousand won in any three-month period. At the time, when banks failed to return savings to the people, many became disheartened. Markets closed and stalls were shuttered as growing numbers of people became worried that they would be unable to exchange their money for U.S. dollars or Chinese yuan.
Currency traders in Pyongsong markets, which are at the heart of North Korea’s manufacturing distribution network, were reduced to tears. Shoppers stayed at home and business travelers suddenly stopped coming. Rice traders were selling 1 kilogram for 2,200 won at the end of last month, but are now asking as much as 30,000 won (of the old currency). This means prices jumped to almost 13 times as much as they were just three days before the currency swap announcement. Currently, all of the North’s security forces are deployed to restrain the people, and not only have the Peoples’ Security Forces and the National Security Department been put on alert, but even the military has been put on emergency status. A 10:00 P.M. curfew is being enforced, and it has been announced that violators will be dealt with strictly.
With this currency exchange, the North’s middle-class is expected to suffer considerably. This is because the poorest have no savings, and the richest hold dollars or yuan. Food sellers are expected to suffer the most, since food sales across the country are carried out in cash.
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