North Korea battered by currency and food price fluctuations

North Korea has been hit by sharp fluctuations in currency and food prices as economic pressures resulting from the Covid-19 pandemic and international sanctions create new risks for Kim Jong Un.

Volatility is expected to worsen the plight of many of North Korea’s 25 million people. It could also undo the country’s unofficial trading system, known as the jangmadang, and increase instability.

The North Korean won has appreciated about 30% against the US dollar and 40% against the Chinese renminbi since the start of the pandemic, according to the Daily NK, a website that tracks North Korean markets. .

“There is real price inflation in the market right now, which is pretty scary. At the same time, fuel prices are quite heavily inflated and forex prices – the dollar and renminbi against the won – have collapsed, ”said Peter Ward, a Seoul-based North Korea expert at the same time. ‘University of Vienna.

Pyongyang has mainly isolated the country from foreign trade and aid since the onset of the coronavirus crisis, fearing the impact of uncontrolled transmission of the virus. The damage caused by the typhoon last year has exacerbated economic pressure.

Experts attributed the currency and currency movements to the combination of collapsed trade and the state’s efforts to remove foreign currencies from domestic circulation.

William Brown, a former U.S. intelligence officer who heads Northeast Asia Economics and Intelligence Advisory, a consultancy firm, said monetary stability had been a hallmark of Kim’s reign. This stimulated the development of the market after periods of inflation and currency depreciation under Kim Jong Il, his father.

The “wild swings” risked increasing the level of popular despair in the country, Brown wrote for 38 North, a program run by the Stimson Center, an American think tank. “At some point, even now, inflation may appear to him to be a greater enemy of stability. . . than the United States, ”he added.

The shortage of cross-border trade, which appears to have reduced demand for foreign currency, coupled with the regime’s efforts to limit the use of the renminbi and the dollar, pushed up the won’s value, analysts said. Meanwhile, prices of staple foods, especially rice and grains, have risen in recent weeks, indicating further disruptions in supply.

Go Myong-hyun, an expert on North Korean economics at the Asan Institute for Policy Studies, a Seoul-based think tank, noted that Kim had ordered the country to reduce its dependence on the “disease. »Imports, in line with recent measures aimed at centralizing control of the economy and squeezing the country’s elite.

“The North Korean system will avoid repeating the famine of the 1990s, the biggest story here is the North Korean regime’s efforts to suppress the market system. . . to me it is very clear that it goes after the jangmadang,” he said.

Kim’s regime is also looking to its army of hackers to raise funds, experts said.

Yana Blachman, a former Israeli intelligence officer who works for cybersecurity group Venafi, said the proceeds of cybercrime should be seen as the primary means of generating income. North Korean cybercriminals have raised billions of dollars in recent years through a wide range of schemes targeting banks and other financial-related institutions, including peer-to-peer lenders and cryptocurrency exchanges.

“Many attacks go unreported, especially in terms of smaller, unnoticed attacks like ransomware and cryptocurrencies,” she said.

The economic woes are being felt hard by North Koreans, many of whom are already food insecure, according to defectors who maintain communication with contacts in the country.

Kang Chol-hwan, a Seoul-based defector, said the prices of food and basic items have soared three to ten times.

“It’s like Kim’s regime is slowly coming to a standstill,” he said.

Another escapee Seo Jae-pyeong said food aid levels from China appeared to be dropping, despite early signs of increased shipments.

“Asking how many meals people are having is not the right question,” Seo said. “The question should be whether the soup is thin or thick.”


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About Louis Foulds

Louis Foulds

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