North Korea has tolerated the widespread use of more stable foreign currencies like U.S. dollars and Chinese yuan since a bungled revaluation of the won in 2009 triggered runaway inflation and public unrest.
The shift to using dollars and yuan came amid economic turmoil and a famine in the 1990s that crumbled the state rationing system, prompting the emergence of capitalist-style markets.
“My money was all gone. I was extremely frustrated and embarrassed but couldn’t do anything in protest,” Jeon said. “I saw many people crying and heard others fled to South Korea.” Paek H.O, who defected from the northeastern North Korean town of Musan in 2018, said she used the yuan to buy expensive goods and the won for cheap items such as sodas, vegetables and bread sold at markets. About 50 professional money changers operated in Musan, she said.
The won had stabilized at around 8,000 per dollar since 2012-2013 but suddenly sharply strengthened in 2020 when North Korea sealed its borders to guard against COVID-19. According to North Korea monitoring groups, the won was trading on the street at about 6,700-7,000 per dollar in late 2020; 4,600-7,200 in 2021; and 5,200-7,500 in the first half of 2022. Later in 2022 it dropped back to about 8,000 won per dollar.
Kang Mi-Jin, a defector who runs a company analyzing North Korea’s economy, said people in nearly 20 regions across North Korea voluntarily stopped using foreign currency in 2021 during a campaign against “anti-socialist elements" due to worries about possible punishment. Citing her contacts inside North Korea, Kang said the North Koreans also held onto foreign currency as a safe haven.
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