The Chinese yuan is trading higher than it has since North Korea closed its border with China in January of 2020, Daily NK has learned.
In particular, with Yanggang Province and North Hamgyong Province receiving orders regarding the restart of trade, the yuan has strengthened faster than the dollar.
According to Daily NK’s regular survey of market prices in North Korea, the yuan was trading at KPW 1,120 in Pyongyang and Hyesan as of Monday.
Compared to Nov. 27, when the yuan was trading between KPW 800 and 900 in both cities, the yuan has climbed more than 30%.
This is the first time the yuan rate has climbed so steeply since the North Korean authorities closed the border.
YUAN’S RISE MAY BE CONNECTED TO GROWING SIGNS TRADE WILL RESTART
The yuan’s steep climb against the North Korean won follows moves in provincial areas to restart trading.
According to Daily NK sources, North Korean authorities have started modernizing the Wonjeong-ri Customs House in Undok County, North Hamgyong Province, along the border with China.
Additionally, Hyesan Customs House in Yanggang Province — which had been closed for three years — received an order in late November regarding the construction of a quarantine station, with work currently underway.
Anticipation that trade will restart in North Hamgyong Province and Yanggang Province from early next year has likely had an impact on the rising yuan rate, too.
The yuan, which had been holding steady between KPW 1,200 and 1,300 in early 2020, began falling as trade and smuggling stopped in frontier regions due to the closure of the border.
By June of 2021, it had fallen to the KPW 500 to 600 range.
Prior to the closure of the border, the yuan was in fairly common use in areas along the border, with the currency not only used in trade, but also in circulation in marketplaces along with the North Korean won.
However, with the trade restricted, local demand for the yuan plummeted, and even in markets, fewer people were reportedly paying in yuan.
In particular, with the North Korean authorities restricting individual trade while focusing on state-centered maritime trade through the ports of Nampo and Songnim, the dollar became the preferred currency for payments between North Korea and China.
Because of this, the dollar dropped far less precipitously than the yuan during the border closure period. In fact, the dollar fell 50% against the won compared to the rate at the end of January of 2020, while the yuan fell 66%.
DOLLAR RECOVERS TO RATE PRIOR TO BORDER CLOSURE
Meanwhile, the dollar was trading at KPW 8,300 in Hyesan as of Monday. Compared to Nov. 27, when it was trading at KPW 8,200, the rate had risen slightly.
It appears the dollar rate has recovered to where it was just prior to the closure of the border.
The dollar has steadily strengthened since July, likely a result of growing state-led trade between North Korea and China.
In fact, trade between North Korea and China continues to grow.
According to a monthly report on trade statistics between North Korea and China published by the IBK Economic Institute on Nov. 20, trade between the two countries in October climbed 47.6% over September, which itself had been a post-COVID 19 high, and had recovered to 55.1% of what it was in December of 2019, prior to COVID-19.
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