New DPRK currency plummets against Chinese yuan

According to Yonhap:

North Korea’s new currency introduced in late November has plummeted in value compared to the Chinese yuan, a local radio broadcaster claimed Sunday.

The Seoul-based Open Radio for North Korea (ORNK), citing unidentified sources along the Sino-North Korean border, said that merchants were exchanging one yuan for 1,000 new North Korean won as of late last month, plummeting from the 50 won traded for every yuan on Dec. 3, right after Pyongyang introduced the new currency.

Under the move, the communist country knocked two zeros off its currency without warning on Nov. 30 in the first such value adjustment since 1959.

The radio, which aims to inform North Koreans on events happening in the outside world, said the value of the new North Korean currency fell to 520 won to the yuan by the middle of last month, indicating a steady depreciation throughout the month.

Before the currency reform took place, 1 yuan was worth around 588 old won, which is equivalent to 5.88 new won.

The ORNK speculated that the reason for the new currency’s weakness may be Pyongyang’s decision to not allow foreign currency to circulate in the market.

“The official proclamation to ban foreign currency use was made on Dec. 28, but there have been rumors circulating after the currency reform took place, causing the new won to depreciate against Chinese money,” the radio station report said.

It said that with Pyongyang unlikely to allow the use of foreign money as a medium of exchange or to bolster its new currency, it may be hard to determine when the value of the new won will stop falling.

North Korean media reported early last month that authorities were introducing new money to curb the mushrooming free market and raise the value of the country’s legal tender.

There have been unconfirmed reports that the currency reform has drawn resistance from ordinary citizens and merchants, whose savings have been drastically cut by the unannounced measures.

Read the full article here:
N. Korea’s new currency plummets against Chinese yuan: report
Yonhap
1/3/10

Additional info:

1. Previous posts on the DPRK’s recent monetary changes can be found here.

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