After increasing slightly in early to mid-December, the USD-KRW exchange rate has fallen again to the KRW 6,000 range, Daily NK has learned.
A source in North Korea told Daily NK on Dec. 31 that the exchange rate in Pyongyang was just KRW 6,670 to the dollar.
On Dec. 12, however, the Pyongyang USD-KRW exchange rate had increased to KRW 7,150 to the dollar, which was 10% higher compared to the rate Daily NK confirmed on Nov. 28.
Other regions of the country appear to be experiencing similar fluctuations in their local USD-KRW exchange rates. As of Dec. 24, Daily NK confirmed that the exchange rate in Sinuiju, North Pyongan Province, was KRW 6,500 to the dollar, while Hyesan, Yanggang Province, witnessed an exchange rate of KRW 6,900 to the dollar.
The KRW-RMB exchange rate, meanwhile, continues to climb. The exchange rate was RMB 1,100 to the North Korean won in mid-October before falling drastically down to RMB 840 in late November. As of Dec. 31, however, the rate had risen to RMB 910.
The rise and then recent fall of the foreign exchange rate may be due to “expectations” about the restart of Sino-North Korean trade.
Despite hopes that parts of the Sino-North Korean border would reopen after the Eighth Party Congress, there have not yet been any clear signals that trade across the border will open anytime soon.
“There have been no signs that [trade will restart] despite the party congress approaching, and in spite of wide spread rumors that trade will restart [in early 2021],” the source told Daily NK. “There were rumors that [the authorities] would expand the [number] of trade permits available, but the government continues to refrain from issuing the permits.”
The source suggested that because North Korean authorities are not yet ready to restart trade across the border from an “administrative” point of view, there is a very small chance that Sino-North Korean trade will restart over the next month.
North Korean authorities have, in the runup to the Eighth Party Congress, strengthened control over the border region, and people in the region are fearful about the heavy punishments they may face if they are caught conducting smuggling activities or any other “unpermitted activities.”
Fears over harsh punishments have likewise led those who were trying to buy up as many dollars as they could when the exchange rate fell in early December to refrain from money changing activities for the time being.
“Since Dec. 20, there’s been very few people asking around for dollars,” the source said. “Money changers are no longer [buying or selling] foreign currency.”
In fact, money changers as a whole have recently stopped providing “dollar exchange services” anymore. As part of efforts to maintain their existing networks, many have agreed to the “unsaid principle” of refraining from unilaterally increasing or decreasing exchange rates. Recently, they have come to an “agreement” of sorts to refrain from buying dollars, the source said.
According to him, the money changers expect trade to restart by the middle of next year, which is why they were able to come to such an agreement.
“Based solely on rumors that trade will restart, the currency exchange rate will likely increase, but the status quo will likely continue unless new measures [by the government] are taken,” he added.