There are competing theories for why the North Korean won is gaining strength this year, ranging from pandemic border closures killing demand for foreign currencies to the isolated country instituting a crackdown on their use [File: Bloomberg]
(Bloomberg) — In normal economies, currencies weaken in times of difficulty, but something counter-intuitive is happening in North Korea: the won is surging just as things are getting worse.
Kim Jong Un’s country has been hit by the toughest sanctions in its history, massive flood damage and an unprecedented pandemic that cut off most of its trade. The economy posted its sharpest drop in more than two decades last year, while its people are facing one of the worst food shortages in more than 10 years.
But the North Korean won has jumped 25% against the dollar this year, calculated on a monthly average basis using the numbers reported by the two media organizations that track it. That follows a 15% surge in 2020.
There are competing theories for why it’s happening, ranging from Kim’s pandemic border closure killing demand for foreign currencies to the isolated country instituting a crackdown on their use. Whatever the reason, most observers agree it’s no good thing.
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Update: Why is North Korea’s currency surging against the US dollar? (Al Jazeera)
WNU Editor: This is not good. North Korea is a centralized communist state that controls everyone’s life. This surge in the local currency tells me that they have cracked down and eliminated all those who are in the business of trading foreign currencies, a trade that is necessary for North Koreans who want to buy goods from China and elsewhere. With no access to foreign currencies, everyone in North Korea is now forced to use the won to buy only locally produced goods.