Soaring exchange rate drives up food prices
(image: iStock/quantic69)
A recent surge in the U.S. dollar exchange rate against the North Korean won appears to have led to a rise in food prices.
According to a recent investigation by NK Times, in Pyongyang, Pyongsong, Sariwon, and Hamhung, 1 U.S. dollar is being exchanged for 28,000 North Korean won, and 1 Chinese yuan for 3,850 North Korean won.
Compared to just the middle of last month, this marks an increase of 1,000 won per dollar (3.8%) and 300 won per yuan (8.7%).
In Hoeryong and Hyesan, in the border area, the rate is even higher at 28,500 won to the dollar.
The main cause of the sharp rise is identified as a surge in foreign currency demand, spurred by active trade and state-sponsored smuggling.
Since December, the state is reported to have smuggled large volumes of automobiles, household products, and transportation equipment across the border into Ryanggang Province and other regions.
However, payment has been delayed, reportedly prompting mounting pressure from Chinese merchants.
As a result, trading companies and donju (moneyed elites) that brought in the goods are scrambling to acquire foreign currency, further accelerating the upward trend in exchange rates, according to sources.
“Trade companies and donju that haven’t been able to make payments are desperately trying to buy foreign currency,” a source said. “This movement is making illegal forex market transactions more active and is pushing up the dollar rate even more.”
“Even though state smuggling has been temporarily suspended, trade companies and donju who have yet to pay for previously imported goods are still purchasing foreign currency, so the upward trend in the dollar rate is likely to continue for the time being,” he said.
With the continued surge in exchange rates, food prices are also reportedly spiking in tandem.
In Pyongyang, Pyongsong, and Sariwon, 1 kg of rice is trading at 10,800 won, and 1 kg of corn at 3,500 won. In northern regions such as Hyesan and Hoeryong, rice is priced at 11,000 won per kg (up 200 won) and corn at 3,550 won per kg (up 50 won). The higher food prices in the northern areas are primarily attributed to a greater reliance on imported rice.
“In the markets, imported rice is more widely distributed than domestically produced rice, so when the exchange rate goes up, food prices naturally follow,” he said. “Because of this continued price hike, more and more ordinary residents are reportedly skipping one of their three daily meals.”
Han was born in 1989 in Taehongdan county, Ryanggang province, North Korea. She graduated from Hyesan Teacher's College in 2012, after which she worked as an elementary school teacher. She defected to South Korea in 2016 and works as a reporter at NK Times in Seoul.
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