"North Korean dictator Kim Jong Il's death opens a period of intense danger and risk, but also potentially enormous opportunity for America and its allies. Kim's health had obviously been poor for some time, and his regime has worked to ensure an orderly transition to his son, Kim Jong Eun. The Kim family and its supporters, with everything obviously at stake, will work strenuously to convey...
North Korean Exchange Rate (NKW/USD)
"In principle, currency reforms are not a bad thing. Governments often use them to signal after a period of high inflation that the bad days are in the past and that the government will pursue more responsible macroeconomic policies in the future. Typically a government issues new currency with a number of decimal places or zeroes removed, often linking the nominal value of the new currency to a well-known currency such as the dollar or euro. In recent years countries such as Turkey, Romania, and Ghana have implemented such reforms.
The North Korean case is significantly different from the conventional case in that the move was sprung on the populace without warning, and most critically, enormous limits were placed on the ability to convert cash holdings, in effect wiping out considerable household savings and the working capital of many private entrepreneurs. Citizens were instructed that they had one week to convert a limited amount of their old currency to the new currency at a rate of 100:1 (i.e., one new won would be worth 100 old won). The limit would not finance much more than a 50 kilo sack of rice at prevailing retail prices.
The announcement set off panic buying as people rushed to dump soon-to-be-worthless currency, buying foreign exchange or any physical good that could preserve value. As the value of the North Korean won collapsed on the black market, the government issued further edicts banning the use of foreign currency, establishing official prices for goods, and limiting the hours of markets and products that could be legally traded."
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- Panmunjom Journal; For North Korea Still, the Americans Started It
- U.S.-North Korea Relations
- The U.S. and the Two Koreas: A New Triangle
- The Two Koreas: A Contemporary History
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