Tags: Report | North Korea | Ban | Use | Foreign Currency

Report: North Korea to Ban Use of Foreign Currency

Wednesday, 30 Dec 2009 10:34 AM

North Korea will ban the use of foreign currency for purchases among both its citizens and foreigners beginning Jan. 1, Chinese state television reported Wednesday, another sign the communist government is intent on reasserting control over the economy.

North Korean citizens "will be forbidden from directly using dollars, euros and other foreign currencies in shops, restaurants and other outlets," CCTV said in a brief report on its main evening news program.

Foreigners must exchange foreign currency for North Korean won in order to purchase items, the report said.

The order, issued by North Korea's state security bureau, aims to "forbid the circulation of foreign currency," it said.

No other details were given.

The reported order comes weeks after the hard-line communist government said that it would redenominate the won as part of a far-reaching currency overhaul aimed at curbing runaway inflation and reasserting government control over the economy.

Daily NK, a Seoul-based online news outlet that reports on North Korean affairs, said the order banned all individuals and organizations apart from banks from possessing foreign currency — an indication that the government plans to exert total control over all reserves.

It said the decree was issued on Dec. 26 and went into effect on Dec. 28.

Although one of the world's most isolated countries, North Korea has long allowed foreign money to be used at specially designated outlets, which helped generate hard currency for the regime. The new order apparently would end that practice.

The restrictions come as North Korea faces increasing economic sanctions over its nuclear activities, curtailing arms exports and other traditional sources of hard currency.

Unable to feed its 24 million people, the government began allowing some markets in 2002, including some permitting farmers to trade in produce.

While an economic success, the markets also sold banned goods such as movies and soap operas from rival South Korea, posing a threat to the totalitarian rule of leader Kim Jong Il.

The country's largest wholesale market in Pyongyang was reportedly shut down in mid-June.

The won revaluation reportedly sparked deep anger among North Koreans who are limited in the amount of old North Korean currency they can exchange for new bills.

The remainder must be deposited in banks and many North Koreans apparently believe they will never be able to withdraw such deposits.

Soon after the revaluation, authorities ordered border guards to open fire on anyone who crosses its border without permission, an apparent attempt to thwart defections by people disgruntled over the currency reform.

In addition to controlling black markets and inflation, the ban on foreign currency holdings could also be calculated to dissuade people from attempting to flee across the border into China.

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North Korea will ban the use of foreign currency for purchases among both its citizens and foreigners beginning Jan. 1, Chinese state television reported Wednesday, another sign the communist government is intent on reasserting control over the economy. North Korean...
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Wednesday, 30 Dec 2009 10:34 AM
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