The value of the North Korean Won has been dropping steadily for years, but especially since the currency redenomination of late 2009. Now, in 2013, around 80% of transactions in markets along the Sino-North Korean border are conducted in Chinese currency (RMB, or Yuan).
New Daily NK footage of markets in and around Hyesan, a border city on the Sino-North Korean frontier, shows clearly how traders now use Chinese rather than local currency, even for trade in rice, the standard indicator of price inflation in North Korea. In regions deeper in the North Korean interior there is less use of Chinese Yuan, with a 50%-50% split between U.S. Dollars and North Korean Won. In both cases, however, the growing preference for foreign currency is due to the pressure of inflation eroding the value of the North Korean Won.
As of mid-April this year, 100 Chinese Yuan was worth 130,000 North Korean Won, meaning that something like a coat, which would cost 200 Chinese Yuan and require two high-value 100Yuan notes, would cost 260,000won, requiring a pile of cash.
The footage contains images of an alley market around Hyesan Market, along with a second market in Kim Hyung Jik County. It shows many things, including jumpers, scarves, gloves, coats, cosmetics, perfumes, toothpaste, toothbrushes and other daily necessities, all traded in Chinese Yuan. At the time the footage was taken, mid-February this year, cheap Chinese rice was selling for 4.6-5 Yuan/kg, and North Korean rice for 4.8-5 Yuan/kg.
As the filmmaker approaches one vendor he asks the price of rice, and gets an answer in Yuan. He has to ask again to get an answer in “our money,” which means North Korean Won.
A similar situation can be seen across the board. The video shows that, with the exception of locally sourced rice, most vegetables, seafood, basic necessities and confectionary are Chinese-made. In the winter clothing section, children’s winter clothes cost 140 Yuan, and 250 Yuan buys a pair of adult shoes. Chinese pants cost 80 Yuan, vests 100 Yuan, and perfume is 60 Yuan.
According to the source, “90% of traders in Hyesan work in Chinese Yuan. In the markets they sell rice for four or five Yuan, just like they do in China. The crackdowns are strict, but they still trade in Chinese Yuan. They lost faith in North Korean currency a long time ago.”
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