With the start of the new year, market prices in North Korea appear to be unstable. The USD-KPW exchange rate has plummeted once again, and the price of a kilogram of rice has fallen below the KPW 4,000 range. Meanwhile, the price of corn is – oddly – rising.
During the closing ceremony of the Eighth Party Congress on Tuesday, North Korean leader Kim Jong Un stressed that economic problems needed to be urgently resolved to stabilize the lives of the people. However, it seems bringing about tangible economic stability will not be easy.
Daily NK’s own reporting determined that as of last Monday, the North Korean won was trading at KPW 6,100 to the dollar in Pyongyang, KPW 5,900 in Sinuiju and KPW 5,800 in Hyesan. This is the first time since 2012 that the North Korean won is trading in the KPW 5,000 range.
How far the exchange rate has fallen differs from region to region. Compared to Dec. 24, it has fallen 7.5% in Pyongyang, 9.2% in Sinuiju and 16% in Hyesan. The fall has been especially pronounced in Hyesan compared to Pyongyang and Sinuiju.
The price of rice is decreasing significantly as well. The price of rice in Pyongyang, which was KPW 4,500 a kilo at the end of last month, had fallen to KPW 3,500 as of Monday. That is a drop of more than 22% in about half a month.
Typically, rice prices in North Korean markets are relatively stable from December – immediately after the harvest season. This period of relative stability usually lasts until early January of the following year.
Broadly, it appears that a drastic weakening of North Koreans’ purchasing power as incomes fall due to the impact of COVID-19, international sanctions, and flood damage has helped drive a fall in rice prices.
Active price controls by the authorities also appears to be playing a role. Merchants who had acquired foodstuffs may have released all their goods into the market, fearful of government crackdowns on them raising their prices.
However, the price of rice has risen a bit from KPW 2,000 to KPW 2,300. Accordingly, the difference in the price of rice (KPW 3,500) and corn (KPW 2,300) has greatly narrowed. This may be because North Koreans have recently been buying more corn, which is comparatively cheaper than rice.
The price of pork in North Korean markets has risen a bit compared to last month to KPW 15,000 a kilogram in Pyongyang, KPW 15,500 a kilogram in Sinuiju and KPW 16,000 a kilogram in Hyesan. However, a source said that, contrary to Daily NK’s market survey, pork is now almost impossible to find in markets due to African Swine Fever.
As a result, pork is actually trading at over KPW 20,000 a kilogram. Even though there is no pork on the market, North Korean authorities may be taking measures to prevent the price of the meat from rising.
Meanwhile, prices for gasoline and diesel appeared to fall slightly last month, but have skyrocketed against since the start of January. As of Monday, the price of gasoline was KPW 10,000 a kilogram in Pyongyang, KPW 11,000 in Sinuiju and KPW 12,000 in Hyesan, while that of diesel was KPW 8,000 a kilogram in Pyongyang, KPW 7,900 in Sinuiju and KPW 8,200 in Hyesan.
With North Korea completely dependent on imports for gasoline and diesel, the price of petrol products frequently changes according to total imports. Compared to the end of last month, however, the price of gasoline has climbed 28% in Pyongyang, 44% in Sinuiju and 51% in Hyesan, while the price of diesel has increased by 60% in Pyongyang, 58% in Sinuiju and 43% in Hyesan.
The prices of oil products have witnessed a phenomenon called “decoupling.” In North Korea, exchange rates and oil prices usually rise and fall together, but now the exchange rate continues to fall despite rising oil prices.
“Usually, oil prices and dollar prices rise and fall together. We’ve never really seen market prices like they are now,” a source in North Korea told Daily NK. “People are saying it’s a bit strange.”
However, there have been no signs so far that North Korean authorities have directly intervened to bring about the lower exchange rates.
Kim Byung-yeon, an economics professor at Seoul National University, said the decoupling could be the result of “artificial intervention” rather than natural economic trends.
“If government measures have had an impact, it seems exchange rates and oil prices have risen and fallen for different reasons,” he said.