Foreign exchange rates have risen in North Korea’s markets, but the market rate of the Chinese yuan (RMB) to the North Korean won (KPW) has seen a particularly rapid increase, Daily NK has learned.
According to Daily NK’s regular survey of prices in North Korea’s internal markets, one dollar traded for KPW 8,510 at a Pyongyang marketplace on Feb. 18. This represented a 1.6% increase from the survey two weeks earlier, when one dollar sold for KPW 8,380 in Pyongyang on Feb. 4, indicating that the rate is trending upward.
A survey of marketplaces in Sinuiju, North Pyongan Province, and Hyesan, Yanggang Province, found that the dollar-won rate had risen by a similar amount as in Pyongyang. In Hyesan, one dollar bought KPW 8,580 on Feb. 18, up 2.1% from two weeks earlier.
The dollar-North Korean won exchange rate has been falling since December. After bouncing around the KPW 8,200-8,400 range for some time, it recently rebounded to around KPW 8,500.
The Chinese yuan, on the other hand, had been appreciating slowly but steadily since December before surging.
The biggest increase in the yuan-won exchange rate was in Hyesan, Yanggang Province, where one yuan traded for KPW 1,400 on Feb. 18 at a marketplace. Considering that one yuan traded for KPW 1,262 on Feb. 4, the rate has effectively risen 10.9% in the past two weeks.
This was the first time in seven months that the yuan-to-won exchange rate rose above KPW 1,400 when North Korea’s trading volume increased significantly in July 2023.
The yuan-to-won market exchange rate also rose significantly in both Pyongyang and Sinuiju. In Sinuiju in particular, one yuan traded for KPW 1,380 on Feb. 18, up 9.3% from two weeks earlier.
Yanggang, North Pyongan, and North Hamgyong provinces border China, making them highly susceptible to the influence of the Chinese yuan. There has been no recent indication that the North Korean authorities have issued any orders to expand trade.
Chinese yuan adheres closely to prices in foreign countries
A major factor in the Chinese yuan appreciating more than the dollar in North Korea appears to be international prices.
The People’s Bank of China has recently lowered the benchmark lending rate in an attempt to stimulate China’s depressed real estate market. This has raised hopes for an improvement in the Chinese economy and fueled a strong yuan.
The People’s Bank of China announced a dollar-to-yuan exchange rate of RMB 7.1018 on Feb. 22, down 0.02% from the previous trading day. A decline in the dollar-to-yuan exchange rate means that the yuan is appreciating against the dollar.
“Since most dollars come through China, this currency is affected by the situation overseas, but a notable feature of the Chinese yuan is that it strictly follows foreign prices,” said a source in North Korea, speaking on condition of anonymity for security reasons.
Since 90% of North Korea’s trade is with China, the value of the Chinese yuan is more sensitive to international prices than the value of the dollar.
However, since North Korea imports much more than it exports in trade with China, a strong yuan is advantageous for the North. This situation also raises the possibility that the authorities will take indirect steps to control the exchange rate.
Translated by David Black. Edited by Robert Lauler.
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