Mick Hartley

North Korea has changed currency. No prior warning: they just did it. The Daily NK has a number of posts…here (from Monday):

In a surprise move, the North Korean central bank has revalued and replaced its national currency as of today, according to several sources.

One source relayed that from 2 P.M. the old paper currency started being exchanged for a new one, while another source from Pyongyang claimed that the switch began at 11 A.M.

The exchange rate for the new currency is 100:1, so old 1,000 won bills are being exchanged for new ten won bills.

Regarding the purpose behind the currency reform, one source suggested, “It looks like an attempt to control inflation, but it may have the side effect of making consumer reliance on dollars or Yuan rise due to a loss of confidence in the value of the North Korean currency.” …

A source in North Hamkyung Province told The Daily NK, “This morning, there was a decree to people’s units. When the news spread in the jangmadang, people panicked.”

A Sinuiju source reported, “Traders gathered around currency dealers. Chaos ensued when currency dealers tried to avoid them.”

and here (from yesterday):

Following the withdrawal and replacement of the old North Korean currency with redenominated bills on the morning of November 30, North Korean society reportedly plunged into confusion. According to The Daily NK’s sources inside the country, the People’s Safety Agency (PSA) was ordered to control residents, and the National Security Agency, Defense Security Command of the People’s Army and army bases were all placed on standby.

The exchange rate for old and new bills is 100:1, and the ceiling for any given household was 100,000 of the old currency, 1,000 won in new denominations. If one has more than 100,000 won, the rest is not able to be exchanged.

This has rendered the savings of jangmadang traders and the middle classes worthless, especially for those without foreign currency in their possession.

The scene in Hyesan, Yangkang Province:

From approximately 11 A.M., PSA and NSA agents and community watch guards from several factories and organizations started patrolling the city. Around noon, trucks of soldiers were noticed downtown.

It was around 10:15 A.M. when the news about currency reform was first heard in the Hyesan jangmadang. A woman in her early 20s rushed among street-stands of necessities informing traders that at 11 A.M. the exchange of old bills into new bills would start and that the maximum amount for exchange was 100,000 won per household.

Upon hearing the last piece of news, traders became upset.

Then, at around 10:40 A.M., the manager of the jangmadang came out and delivered an official decree, “Go back to your factories and People’s Units and follow instructions from the upper; there will be a currency exchange.”

The source said, “Upon releasing the news, some woman in the jangmadang fell unconscious.”

He added, “While traders in other goods use Yuan, rice traders generally use our currency. Therefore, they must have suffered a more serious shock.”

The authorities also warned people not to damage the old bills, reminding them, “Spoiling money on which Great Leader’s portrait is printed is treated as treason.”

A source from Shinuiju reported, “Loud sounds of weeping in every house have not ceased since the news was released. Weeping and fighting between couples has not stopped anywhere. The atmosphere of the city is terrible now.”

He added, “This currency reform is a horrifying trick. It is the first time people have cried on the streets since the Great Leader’s death.”

So, with the 100,000 won limit (very roughly about $40*), those who'd managed to put something by will have seen their savings disappear overnight. Or at least that was the situation. According to today's Daily NK update, this has now changed…but not significantly:

[R]esident sentiment turned aggressive once the details of the proposed exchange became clear, and now the North Korean authorities have revised those details once again.

A source explained, “On December 1st at 10 A.M. an urgent meeting for cadres of Party and Administrative Committees was convened. As a result of that meeting, a new decree was released.”

“The maximum amount per household which could be exchanged in cash was initially set at 100,000 won, but overnight it increased to 150,000 won, then subsequently a new decree was handed down.”

“According to the new decree, the exchange rate is still 100:1 for 100,000 won, but now the authorities will only permit people to exchange the rest of the money at 1,000:1.”

As a result, if you take 200,000 won in cash to a bank, you get 1,100 won in new denomination bills. This emergency formula will do nothing other than destroy the fortunes of the people.

Joshua at One Free Korea has a couple of posts, with links, including Nicholas Eberstadt, North Korea Picks Citizens’ Pockets, and this from AP.

* according to the Times, the official exchange rate for 100,000 won is £475.