North Korea has been clamping down on the
use of foreign currency in some regions, causing difficulty for vendors and
customers who are used to conducting business in tender other than the North
Korean won [KPW: Korean People’s Won], the Daily NK has
learned.
“Starting late last year, [officials]
abruptly instigated a crackdown on the use of foreign currency in the
marketplace, and now in the new year, it’s hard to find
vendors who still use cash from outside,” a source in
Yangkang Province told the Daily NK on January 15th.
“When it was common to use foreign
currency, it was used not only to purchase expensive products but even simple
goods such as tofu, which was bought with Chinese money [RMB],” the source said. “Now, if you’re caught using foreign currency, they confiscate your cash and
products, so most people are using the local bills,” she explained.
Using foreign currency in North Korean
markets is officially banned, but the practice carries on as an open secret–its use forming the dominant means of business and trade. Especially after the botched 2009
currency redomination, people have become more dependent on foreign currency–a
practice predicated on strong notions that money from elsewhere is not subject
to currency reform or exchanges, rendering it a much safer choice to wary residents.
Typically, even if the state issues
directives ordering those who own foreign currency to exchange it for local
bills, people mostly refuse to comply, lingering resentment and skepticism from the 2009 compelling them to find a multitude of ways to try to guard their foreign cash.
Following the 2009 disaster, Pyongyang attempted to tighten controls on foreign currency, but in the end, it failed to turn
around the markets. Since then, the state has turned a blind eye to foreign bills pervading the markets along the border areas, according to the source.
“The crackdown this time may be a measure
from above [Central Party] to collect foreign currency from people, but it
could also be an independent move by provincial security officials who want to
use this money to offer bribes up to Party cadres,” she speculated.
Commenting on the swiftness of the change, she noted that just last month, buying even the simplest of things with RMB was standard practice, but now local currency must be used even for larger products, making things exceedingly inconvenient for residents. “It’s
hard to tell how long this will continue on for, but no vendor is dumb enough
to swap out his or her money for domestic money,” she said.
Trusted associates and good connections can alleviate some of these difficulties, but are still often a gamble in terms of repercussions. “Vendors who know each other well still use
Chinese money in the process of making wholesale and retail purchases,” she said. “But even within vendors there
are spies for the security department, so not knowing when you’ll get caught, people are refraining from using foreign currency in
most marketplaces.”
In response to the continued clampdown, many residents have said, “We’ve
fallen victim to it during the currency reform, so we’re
not going to be fooled twice.” Others have remarked, “Each year the state tells us to place importance on certain things,
but to us, foreign currency is our very life.”
As of the 7th, 1 USD was worth roughly
8,150 KPW in North Korean markets, while 1 RMB traded for 1,320 KPW. In
order to exchange North Korean money for one 100 RMB bill, residents would need
26 of the highest denomination 5,000 KPW bill, along with two 1,000 KPW, making
it a total of 28 notes. As such, vendors have no choice but to carry around
large bags equipped to hold thick stacks of the local notes.
Conversely, a source in North Pyongan
Province reported that no evidence of this order exists in the region as of yet. “Using
foreign currency is not an option, it’s a must,” the source said. “If they start cracking
down on the markets, it’s not only local sales in the
marketplace but trade that will experience significant damages because foreign
currency will not be able to circulate,” she concluded.
