The KPW-USD exchange rate has recently risen across all major cities in North Korea in what appears to be a development connected to government moves to expand state-led trade.
According to Daily NK’s regular survey of market prices, the US dollar was trading at KPW 8,400 in Pyongyang as of Apr. 30.
This was a rise of 4.87% compared to Apr. 16, when one dollar equalled KPW 8,010 in the capital city.
Sinjuiju also saw a similar increase in the USD-KPW exchange rate. On Apr. 30, the exchange rate was 1 USD:KPW 8,360, which was a rise of 4.24% compared to Apr. 16.
Daily NK’s regular survey also found that the USD-KPW exchange rate in Hyesan (KPW 8,350) rose at a rate similar to that of Sinuiju.
This is the first time this year that the country’s USD-KPW exchange rates have risen more than 4% in a period of two weeks. By comparison, exchange rates for the dollar rose as much as 15% over two weeks in late July 2022 following rumors that large trading companies operated by the Central Committee of the Workers’ Party of Korea and Ministry of Defense were gearing up for an expansion of state-led trade.
Meanwhile, KPW-RMB exchange rates in Pyongyang, Sinuiju and Hyesan have also risen compared to the rates surveyed on Apr. 16, albeit the amount of increase varies depending on the region.
The Chinese yuan rose 0.83% in Pyongyang compared to Apr. 16 and is currently trading at KPW 1,210 in Pyongyang as of Apr. 30. Hyesan saw a similarly minor increase with the yuan currently trading at KPW 1,230.
By contrast, the KPW-RMB exchange rate jumped significantly (5.04%) in Sinuiju, with the rate jumping from KPW 1,190 to KPW 1,250 from Apr. 16 to Apr. 30. This 5.04% increase was more than six times greater than the increase in rates in Pyongyang and Hyesan.
Sinuiju likely experienced such a drastic increase in the KPW-RMB exchange rate due to measures related to the reopening of the overland border between North Korea and China.
Daily NK reported earlier this month that North Korean authorities issued orders in late April to the Sinuiju customs office related to preparations for the reopening of the overland trade. Around the same time, the North Pyongan Province’s party committee held lectures dealing with trade law and regulations aimed at trade workers operating in Sinuiju.
With the return of pre-COVID levels of cross-border trade between North Korea and China this year, the USD-RMB exchange rate, which was skewed during the COVID-19 lockdown period, appears to have returned to normal.
According to China Customs, trade between China and North Korea in the first quarter of 2023 amounted to USD 480 million, about 95% of the trade volume of pre-COVID levels recorded during the first quarter of 2019.
Following the outbreak of COVID-19, the North Korean government shut down the country’s borders and domestic exchange rates for both the US dollar and the Chinese yuan plummeted. However, US dollars were the main currency used in government-sanctioned trade transactions during the COVID lockdown period, a situation that prevented the KPW-USD exchange rate from falling quite as severely as the KPW-RMB rate.
In September of last year, North Korea’s USD-RMB exchange rate skyrocketed to as high as 10 yuan to the dollar. Prior to the pandemic, the value of the yuan had generally floated around 1/6th of a dollar. The pandemic caused both foreign currencies to drop in value, but the yuan fell much more steeply and settled around 1/10th of a dollar.
Following the growth in cross-border trade in late 2022 – including an increasing number of freight trucks crossing into Sinuiju, and the resumption of smuggling activities in North Pyongan and North Hamgyong provinces – the KPW-RMB exchange rate has rebounded to levels seen before the pandemic.
According to Bloomberg News, the global USD-RMB exchange rate was RMB 6.9184 as of Apr. 28. When considering the Apr. 30 rate in North Korea, which was RMB 6.9421 to the dollar, the country’s exchange rates appear to have leveled out close to international market rates.
Translated by Rose Adams. Edited by Robert Lauler.
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