Exchange rates in North Korea have been skyrocketing since the recent restart of China-North Korea freight train service. Even though North Korean authorities have not issued any specific orders regarding the restart of broader trade, traders and donju (wealthy entrepreneurs) are expecting imports to expand and are buying up foreign currency.
According to Daily NK’s regular survey of market prices in North Korea, the yuan was trading at KPW 860 in Pyongyang, KPW 870 in Sinuiju, and KPW 890 in Hyesan on Monday.
In the case of Sinuiju, the yuan had shot up KPW 170 in just four days from Jan. 20, just after the restart of China-North Korea freight train service, when it was trading at KPW 700.
The yuan has spiked 45% compared to Jan. 11, several days before a North Korean freight train pulled into the Chinese city of Dandong, when it was trading at KPW 590 in Pyongyang, KWP 600 in Sinuiju, and KPW 620 in Hyesan.
The dollar has similarly strengthened against the North Korean won. The dollar was trading at KPW 6,750 in Pyongyang, KPW 6,730 in Sinuiju, and KPW 6,675 in Hyesan on Monday. This was 43% higher than on Jan. 11.
This increase in exchange rates appears due to expectations that China-North Korean trade will begin again.
Traders in North Korea speculate that with freight trains in operation, the border might be gradually reopening, even if small trading bases and private traders may not be able to take part in trade as freely as they did prior to January 2020.
Moreover, North Korean tradeexpect the authorities to continue issuing temporary trade permits at least through Apr. 25 as they have designated the period between late North Korean leader Kim Jong Il’s 80th birthday on Feb. 16 to the 130th anniversary of the founding of the Korean People’s Army on Apr. 25 as the “greatest celebratory period of the nation.”
The “greatest celebratory period of the nation” also includes Kim Jong Un’s appointment as first party secretary on Apr. 11, the anniversary of his appointment as first chairperson of the Central Military Commission on Apr. 13, and late national founder Kim Il Sung’s 110th birthday on Apr. 15.
North Korean authorities will apparently focus on supplying gifts to cadres and ordinary citizens and stabilizing prices to highlight the accomplishments of Kim’s predecessors and emphasize his leadership based on “love for the people.”
To do this, they must move to expand imports of foodstuffs, daily necessities, industrial goods, and other items.
As a result, a growing number of people are reportedly buying up foreign currency and preparing to take part in trade, even if the restart of China-North Korea freight train service proves temporary.
Meanwhile, the price of gasoline and diesel oil has also spiked in the country. As of Monday, gasoline cost KPW 9,700 a kilogram in Pyongyang, KPW 10,100 in Sinuiju, and KPW 10,680 in Hyesan.
This was about 45% more than it cost on Jan. 11, when it was KPW 6,680 in Pyongyang, KPW 6,970 in Sinuiju, and KPW 7,440 in Hyesan.
Diesel prices have likewise skyrocketed. As of Monday, a kilogram of diesel cost KPW 6,440 in Pyongyang, KPW 6,620 in Sinuiju, and KPW 7,000 in Hyesan, an increase of 41-45% compared to Jan. 11.
However, the spike in North Korean oil prices appears due to rising exchange rates rather than reductions in imports.
A source in North Korea said that a lot of transportation fuel is needed to carry the goods currently stored at the Uiju quarantine facility across the country, but that is not why oil prices are climbing. According to him, the price of oil was naturally climbing as the dollar strengthened against the North Korean won, and that oil entered the country from China just a few days ago.