Economics

What is the Currency of North Korea?

The official currency of North Korea is the North Korean won.

The official currency of North Korea is known as the won or the Korean People's won. It has denominations of 100 chon. The Central Bank of the Democratic People's Republic of Korea, headquartered in the capital of Pyongyang, is responsible for issuing the currency. The currency code for the won is KPW while the currency symbol is ₩. The term won is a cognate of the Japanese yen and the Chinese Yuan, with all three names being originally derived from a Chinese word meaning round shape.

History

On December 6th, 1947, the won became North Korea's official currency replacing the Korean yen. Just like many other socialist states, there is another currency issued for foreigners by the Bank of Trade while the won is solely for North Korean citizens. However, the government of North Korea created two different types of the foreign exchange certificates (FEC). One certificate was for visitors from the socialist countries, and it was colored red; it was also referred to as the red won. The other certificate which was blue/green was known as blue won; it was for visitors from capitalist countries. The FEC was still in circulation until 1999, but in 2002, they were officially abolished from use. The main reason for being abolished was so that foreigners could directly use their currency, especially the euro.

Current Use of the Won

As of 2012, those visiting North Korea and some privileged locals could pay for goods that are priced in "tied" won using a local debit card. However, the local debit cards have to be credited by exchanging foreign currency such as the US dollar, the Euro or Yuan at the official bank rate. For instance, one euro provides a credit of 130 won. Local debit cards can be found in international hotels or the popular Pyongyang Department Store No. 1, where the prices of goods are sold at the tied won rate. However, the tied won is not available in the form of banknotes. Normal markets and stores use what is known as the "united" won or the free market rate to price their goods where won banknotes can now be used.

Removal of the Dollar Peg

The government of North Korea changed the emblematic rate of 2.16 won to the dollar in 2001. The change was said to have happened on February 16th which was the same date as Kim Jong-il's birthday. North Korean banks now issue rates that are closer to the black market rates.As of January 2017, the North Korean won stands at ₩129.559 to the US dollar. As a result of rampant inflation facing the country, the value of the North Korean won has been depreciating. According to a report by the defectors from North Korea in June 2009, the black market rate stood at ₩4,000 for $1, and ₩570 Chinese Yuan.

The Re-Valuation

For the first time in 50 years, the won was revalued in November 2009. The country's citizens were given seven days to exchange ₩1,000 notes for ₩10 notes. The maximum amount that was legible for exchange was ₩100,000. However, following several protests staged by some of the populace, the limit was increased to ₩300,000 for bank savings and ₩150,000 for cash. At this time, the official exchange rate stood at ₩150,000 to $740, but the black market value for the same was about $30. The savings of many North Korean citizens were wiped out as a result of the revaluation; it was considered to be a move against the activities of the country's private market.

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