Shenyang, China — North Korean citizens are struggling under the weight of so many changes to their daily lives in a very short period of time, say sources inside the country. One in North Hamkyung Province told The Daily NK wearily on the 5th, “Everything is changing these days. We can see no further than the end of our noses.”
Notably, the declaration, “On punishing severely those who use foreign currencies within our Republic,” has made a big difference. Banning the use of foreign currency within North Korea, since it was released by the People’s Safety Agency on December 26th the Yuan exchange rate has skyrocketed.
Right before the declaration, the exchange rate for Yuan was 1:5 in new denominations on the black market, while the official exchange rate was 1:1.6.
However, after the declaration was handed down, the value of the new denominations drastically dropped, leaving one Yuan worth 20 North Korean won in Hyesan, and 15 in Hoiryeong, Onsung, Musan and Chongjin.
One more element affecting prices and causing steep won depreciation is the one-off giving of cash to agricultural workers on the best-performing farms. Given in December, it means that not only do they have money to spend in the short term; they also have less incentive to release agricultural produce onto the market.
In the case of Migok Collective Farm in Sariwon, North Hwanghae Province, 150,000 won was distributed to each worker. Besides that outstanding example, on those collective farms where workers achieved the state production plan, 100,000 won was given to each, while on those farms which did not fulfill the plan, workers received 15,000 won each.
In years preceding the redenomination, cash and food distribution was much less generous, and many farms did not receive cash at all.
Although official markets are closed, illegal alley markets continue to evade the authorities. Accordingly, the state-designated rice price, 44 won per kilo, has been superseded in such markets by prices of 100 won in border areas and up to 300 won in interior provinces. The Daily NK’s inside sources estimate that this upward movement will not reach its limit for some time, and traders foresee a return to rice costing more than 2,000 won per kilo.
The gap between border and interior region prices is caused by bans on both selling rice between individuals and transporting produce between provinces, and reduced rice imports from China.
Additionally, the North Korean authorities prohibit traders from selling goods, and only allow Procurement Stores to sell at state-designated prices. Naturally, traders are trying to hold onto their goods until circumstances improve, instead of selling them to Procurement Stores at state-designated prices. This is reducing supply and fueling inflation.
Workers in state enterprises currently get a monthly salary of between 1,500 and 5,000 won. Although those salaries appear to have gone up a lot compared to the value of the new denominations, the truth is that due to inflation the benefit of rising salaries is being eaten away.
In this unstable situation several rootless rumors have begun to circulate among the people, only making them more confused. People are saying that this redenomination is only a temporary measure and that permanent denominations will be issued in 2012, or that all bills over 1,000 won will be scrapped, so traders and foreign currency exchange dealers will not receive bills bigger than 500 won.
