The North Korean won-to-dollar exchange rate has yet to begin recovering since plummeting late last month. The rate, which had fluctuated in the KPW 8,000 range despite the closure of the Sino-North Korean border in January, recently fell 20% over the course of a month. After showing signs of recovery in the middle of this month, it appears to be falling yet again.

According to multiple Daily NK sources in North Korea, the won was trading at KPW 6,200 to the dollar in Pyongyang on Nov. 4, KPW 6,480 to the dollar on Nov. 9, and 6,930 on Nov. 15, climbing about 11% over the course of about a week. As of Wednesday, however, the won-to-dollar rate in Pyongyang was just KPW 6,200.

Daily NK’s sources in the country agree that a major cause for the decrease in the exchange rate is that there is no longer anywhere to use foreign currency given that smuggling has largely been cut off since the closure of the border back in January. 

North Koreans have typically used small amounts of foreign currency to buy things at foreign currency shops or department stores, but much of the foreign currency available in the country has been used in transactions involving imported goods. However, the drastic decrease in smuggling across the border has now led to less demand for foreign currency. 

With the won-to-dollar exchange rate falling into the KPW 6,000 range as demand for foreign currency has withered, money changers are now holding on to their dollars. This is because they cannot sell dollars they bought at prices in the KPW 8,000 range for prices now in the range of KPW 6,000. 

North Korean currency
North Korean currency. / Image: Daily NK

That is to say, the hesitancy felt by money changers is having a significant impact on the falling exchange rate, based on reports from Daily NK’s sources. 

North Korean authorities have yet to issue any particular orders or measures regarding the falling exchange rate. So far, they appear to be adopting a wait-and-see approach, sources told Daily NK. 

“Telling ordinary people to use North Korean money instead of dollars or yuan isn’t new. They always say that,” one of the sources told Daily NK. “[The authorities] have not handed down any specific orders about adjusting the exchange rate.”

According to another source in the country, “After the 2009 currency reform, there was a ban on using foreign currency, but the use of dollars or yuan has increased since then. According to him, “If the authorities were to issue a measure aimed at curbing the use of foreign currency, the cadres who knew [about the measure] ahead of time would demand dollars from money changers, which could lead the exchange rate to skyrocket.”

The source’s report suggests that if North Korean authorities were to directly intervene in foreign currency-based transactions, this could lead to “unforeseen negative side effects” that would put the economy in even greater chaos. This is why the authorities cannot easily intervene through policies aimed at regulating these transactions.

Daily NK sources did speculate, however, that if the exchange rate continues to fluctuate, the authorities may have to take some kind of action. 

grasshopper market exchange rate
A “grasshopper market,” or unofficial market, in a village near Pyongyang. / Image: Chinese blogger Lóng Wǔ*Láng Zhī Wěn (龙五*狼之吻 )

“When the exchange rate fell, the Workers’ Party welcomed it,” one of the sources said. “It seems they hoped the situation would hold for a bit longer, but if [the rate continues to fall], they may have to take some kind of action to stabilize it.”

There is little clarity about the exchange rate suddenly fell eight months after the border was closed rather than immediately after the closure – assuming, of course, that the falling exchange rate was directly impacted by the fall in imports. 

“When the border was closed, people hoped that trade would open up again sometime around Party Foundation Day, but the ban on smuggling tightened right before the holiday,” said the source. “The dollar market is frozen as more and more people come to believe trade won’t restart for the time being.” 

Kim Seok-jin, a researcher at the Korea Institute for National Unification in South Korea, told Daily NK that the “COVID-19 shock” appears to be largely responsible for the falling exchange rate in North Korea.

“Demand for foreign currency continued as people believed the border would reopen after a few months, but given that the border has remained closed, the [falling] exchange rate seems to reflect negative expectations [about the restart of trade],” he said. 

“There could also be several other factors in the background affecting the exchange rate. We will need to keep observing the situation [to learn more],” he added.

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Jang Seul Gi is one of Daily NK's full-time journalists. Please direct any questions about her articles to