With major nations around the world such as the United States opening their purses to overcome the economic crisis brought on by COVID-19, currency values for the dollar, euro and yuan are falling. In North Korea, too, the USD-KPW exchange rate has reportedly fallen significantly recently.
The falling exchange rate has led to a reduction in foreign currency-related transactions, which suggests that North Korean authorities may have a tougher time acquiring dollars.
A source in Pyongyang told Daily NK on Thursday that dollars are currently trading at exceedingly low prices, and that while the supply loosened for a short time after Party Foundation Day on Oct. 10, “now money changers won’t offer dollars, so you can’t buy them.”
In fact, the exchange rate for dollars in Pyongyang had fallen 4.6% from KPW 8,400 in September to KPW 8,010 on Oct. 12, the first weekday after Party Foundation Day. It seems that in the middle of last month, when the exchange rate fell by a relatively modest amount, one could purchase dollars cheaply.
As of Wednesday, however, the exchange rate in Pyongyang had fallen to KPW 6,200 to the dollar. This is the lowest it has been since 2012, and represents a 20% drop over around 20 days or so. With the dollar rate falling so suddenly, money changers are refraining from dealing in greenbacks, according to the source.
Amid all of this, North Korean authorities have reportedly ordered trade agencies to secure foreign currency such as dollars, euros and yuan from the “end of this year until early next year.”
“The authorities ordered [the trade agencies] to bring in as much foreign currency as possible, believing that trade will begin – even if at a small scale – after the Eighth Party Congress [set for January],” the source said.
However, those working at trade agencies are losing sleep over how they will secure foreign currency when there are no donjuLiterally "masters of money," donju refers to people who hav... More (North Korea’s wealthy entrepreneurial class) buying goods with dollars right now. This is because nobody will offer the dollars they bought at more than KPW 8,000 while the greenback is trading at around KPW 6,000.
As individuals with dollars hang on to them due to the falling exchange rate, the state is languishing in its inability to secure foreign currency.
The continued halt of Sino-North Korean trade suggests that the currency rate could fall even more and lead to further contraction of the foreign currency market for the time being. From the perspective of the North Korean authorities, they are faced with solving the challenge of “economic recession” that stands before them.
North Korean authorities are actively mapping out policies to stabilize the market, according to the source.
“The authorities have ordered that, from next year, officials strengthen the requirements around issuing trade permits, and that the issuing fee for the permits be raised by 0.1%,” said the source. “They’ve added the condition that traders should bring in at least a fixed amount of state-designated foodstuffs and sundries.”
That is to say, faced with insufficient foodstuffs and sundries after the closing of the border with China, North Korean authorities are apparently putting pressure on traders to focus on imports of those goods as a way to stabilize market prices.
Moreover, North Korean authorities have warned that they will closely scrutinize the backgrounds of Chinese traders offering goods as part of efforts to prevent COVID-19 from entering the country. This suggests the authorities intend to enforce thorough quarantines while guarding against the expansion of “reckless” trade.
