[Hot Topics No. 320]
100 Chinese Yuan is Traded at 570 NK won after Ban on Foreign Currency Trading
As of January 3, 100 Chinese Yuan (Renminbi) is traded at 570 NK won and $100 USD is traded at 3,200 NK won since the People's Safety Agency's announcement of ban on foreign currency trade on December 28.
Public Notice by People's Safety Agency, "Domestic Trading of Foreign Currency Prohibited Beginning January 1"
On December 28, People's Safety Agency released a public notice saying, "All citizens can exchange $100 USD with 3,000 NK won at a foreign exchange office. Trading companies cannot use foreign currency for domestic transactions." As such, foreign currency transactions will cease in all trading companies in the country, foreign currency restaurants, and foreign currency stores, and NK won (exchange voucher) will be used instead. In case trading companies under the Ministry of Foreign Trade have to use foreign currency they will have to obtain authorization from the government first and receive foreign currency from a foreign trade bank.
Illegal Foreign Currency Trading will be Punished Severely
In the morning of December 28, the news of public notice released by People's Safety Agency regarding the ban on foreign currency use was delivered to all citizens. The residents were asked specifically that "You should report immediately when you see people using foreign currency while engaging in trading inside their vehicle, smuggling, secret trading, and illegal border-crossing." People were warned that those who get caught by the security agency while using foreign currency illegally can receive the penalty of capital punishment depending on the seriousness of crime. With the release of public notice, the law enforcement agents actively engage in enforcement activities, whereas the money traders find themselves not being able to do business any more. Beginning January 2, the security authorities started their enforcement operations "based on the decree on foreign currency circulation." Composed of Party officials and law enforcement agents, the enforcement taskforce will crackdown on companies and individuals using foreign currency and thoroughly investigate the source and the circulation route.
Foreign Currency Prohibition Announcement is a "Protective Measure for Domestic Currency Value," Says a Government Official
A government official in Pyongyang posited that the Foreign Currency Prohibition Announcement is "a measure to ban individuals from doing business transactions using foreign currencies in markets." In particular, those who do business inside their trucks and large scale trading companies which use foreign currency in place of domestic currency made it difficult to strengthen government finance. The official said exchanging Renminbi (the official name of Yuan) and US dollar with NK won (exchange voucher) at national banks is a measure to prohibit the circulation of foreign currency in domestic markets and to protect the value of domestic currency.
Crackdown on Foreign Currency Use Begins in Hoeryung
As soon as the ban on foreign currency use was announced, the crackdowns took place nationwide. On December 30 in Hoeryung, North Hamgyong Province, the sugar merchants who were exchanging Renminbi and US dollars were caught by police officers in plain clothes. Caught along with them was a woman in her sixties from Sanup-dong who came to prepare for the New Year's Day holiday while trying to exchange 2 bills of Renmminbi (200 Yuan). The confiscated money was worth 1,140 NK won since the rate is 570 NK won for each 100 Yuan. The merchants and the elderly woman visited the police station and asked for returning at least some of the confiscated money. The officers said, "The enforcement was done based on the new law. You'd better get out before more issues are raised." The woman begged for the money to buy holiday food with tears, but the police officers pushed her away outside the door. She refused to leave and implored them on bended knees. However, the police officers kicked her out of the room and closed the door. The woman wailed, "I need to buy holiday food to feed my grandchildren without parents. What should I do?" but the police officers never responded.