Date
24 July 2017
A small bun can will set you back 2,000 won in North Korea while your US dollar will go a long way -- 8,300 won to the greenback at the present exchange rate. Photo: EJ Insight
A small bun can will set you back 2,000 won in North Korea while your US dollar will go a long way -- 8,300 won to the greenback at the present exchange rate. Photo: EJ Insight

North Korea: Lost in (currency) translation

How much is a small bun in North Korea? The price tag says 2,000 North Korean won.

That translates to about US$20 or 133 yuan at the official exchange rate, making the isolated country the most expensive place to live.

Once, a friend of mine sneaked out of Yanggakdo Island outside Pyongyang (foreigners are required by their minders to stay put once on the island) under cover of darkness and bought a bun. He gave the salesman 10 yuan and received an 11,000 won change.

When I went to Pyongyang during the Easter holiday, I ended up having to solve the currency puzzle.

Although North Korea has an official exchange rate for the won, a large chunk of domestic transactions is settled in foreign currencies, namely, the US dollar and the Chinese yuan, according to media reports.

A North Korean-born Chinese immigrant, who was visiting the country, told me that in Sinuiju, a region on the border with China with a thriving black market, one US dollar buys 8,300 won and one yuan gets 1,200 won.

The information was borne out by DailyNK.com, a South Korea-based website that tracks the North.

Knowing that, I came to the conclusion that the price of the bun is reasonable — about 25 US cents.

In contrast, the official exchange rate is 100 won to the greenback and 15 won for 1 yuan. The US dollar is widely accepted in the country.

A report in China-based International Herald Leader in August 2014 said most North Koreans hold a certain amount of foreign currency including the US dollar, renminbi and euro.

Salaries are paid in the local currency — 2,000 to 6,000 won for ordinary workers — but bonuses are paid in foreign currencies.

Having only won would be inconvenient while having a foreign currency can help a North Korean skirt the ration system which covers certain purchases such as televisions and solar panels.

Our tour guide said the cheapest TV model costs about 500 yuan.

North Koreans became dependent on foreign currencies after a disastrous currency redenomination in 2009.

In an announcement that caught North Koreans by surprise, the government wiped two zeroes off the won and allowed people to exchange only a limited amount of old won for new won.

Before the adjustment, a US dollar fetched 3,500 won on the black market, Bloomberg reported in 2009.

If we translate the exchange rate for the new won (US$1=35 new won) and compare it with the present rate (US$1= 8,300 won), we begin to see why the revaluation was disastrous.

Since then, the new won has been losing by more than twice its 2009 value against the US dollar every year.

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MY/JP/RA

EJ Insight reporter

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