North Korea revamped its national currency for the first time in 17 years, reports said yesterday — a move that appeared aimed at reviving its economy by curbing inflation and black-market trading.
North Korea revalued its currency at an exchange rate between old and new notes of 100 to 1, Xinhua news agency said in a dispatch from Pyongyang, citing a verbal notice yesterday from the North’s Foreign Ministry to foreign embassies in Pyongyang.
The exchange of old notes started on Monday and will continue until Sunday, Xinhua reported. It said no reason was provided for the sudden change.
Xinhua said state-run shops in Pyongyang were closed yesterday morning, with one saleswoman saying the shops would reopen a week later after new prices for commodities were set by the government.
The currency reform drove residents in Pyongyang to rush to black markets to convert stashed-away money into dollars and Chinese yuan, Yonhap News Agency said in Seoul, citing unidentified North Korean traders operating in China.
Yonhap said the move was aimed at fighting inflation and flushing out money traded on the black market.
South Korea’s Chosun Ilbo newspaper speculated that the move was part of leader Kim Jong-il’s efforts to tighten control over his nation as he prepares to hand over power to one of his three known sons.
Analysts called it a significant move toward economic reform for a nation with a stagnating economy and millions going hungry.
“The aim is to flush out money being traded on the black market and to reinvest it in the public sector,” said Dong Yong-sueng, a senior fellow at Samsung Economic Research Institute in Seoul.
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