N. Korea revalues currency for first time in 17 yrs: sources

SHENYANG, China, Dec. 1 (Yonhap) -- North Korea has sharply raised the value of
its currency, its first such move in 17 years, apparently aimed at tackling
inflation and clamping down on black market trading, sources here said Tuesday.
North Korean sources who engage in trade with China told Yonhap News Agency that
the North Korean government implemented the currency reform as of 11 a.m. Monday
and the exchange for the new currency began at 2 p.m.
The exchange rate for new currency is 100 to 1, in which the old denomination of
1,000 won is replaced by the new 10 won, the sources said, speaking on strict
condition of anonymity. The drastic revaluation disturbed the local market, they
said.
"Many citizens in Pyongyang were taken aback and in confusion. Those who were
worried about their hidden assets rushed to the black market to exchange them
with yuan or U.S. dollars. The yuan and the dollar jumped," one of the sources
said.
The revaluation was the first for North Korea since 1992. Since its government
was founded in 1947, North Korea has also undertaken 1 to 1 currency exchanges
four times.
The latest move appeared to be mostly aimed at tackling inflation as the local
currency value has nosedived since the country took economic reforms in 2002 to
make payments and prices more realistic and introduce market freedom. North Korea
also may have sought to draw out money hidden in the underground economy, some
stashed by citizens working abroad.
North Korea is also in a nationwide campaign to rebuild its economy by 2012, the
birth centennial of its founder, Kim Il-sung.
South Korean officials were cautious about the report, as North Korea has yet to
make an official announcement as it did in 1992.
"We cannot confirm the report," an official at the Unification Ministry said.
hkim@yna.co.kr
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