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N. Korea to Ban Foreign Currencies Next Year

Posted December. 29, 2009 00:32,   


North Korea will ban possession and use of foreign currencies from Friday by citizens and business organizations, media reports said yesterday.

Open North Korea quoted a businessman who trades with the North in Dandong, China, as saying, “No foreign currencies such as the U.S. dollar, euro, yen or yuan can be used in North Korea from Jan. 1. Authorities have ordered that all foreign currencies should be exchanged into the North Korean won.”

The Internet news site Daily NK quoted a source from North Hamkyong Province in the communist country as saying, “The North Korean People’s Security Agency issued a declaration on severe punishment for those who abuse foreign currencies in the republic."

"It has also disallowed individuals, trade organizations and foreigners to use foreign currencies in the country, and banned individuals and organizations excluding banks from holding foreign currencies.”

The foreign currency ban was expected, according an interview carried by the Choson Sinbo, a newspaper issued by the pro-Pyongyang group Chongryon, or the General Association of Korean Residents in Japan.

The daily quoted Cho Sung-hyun, an official at the North’s central bank, as saying, “Foreign currencies will be no longer used at stores and restaurants. Even stores and restaurants catering to foreigners and ethnic Koreans from abroad must exchange foreign currencies into our money. It will be so in the future.”

These measures seem to part of Pyongyang’s bid to raise monetary resources needed for reviving its economy by absorbing foreign currencies from residents and businesses. The reality is, however, that the North’s economy is conducted in foreign currencies, especially the greenback.

Experts say, however, that North Korean authorities cannot completely ban the use of foreign currencies. The North is called a “foreign currency paradise” because residents and business organizations have conducted major economic transactions in foreign currencies after the North Korean won dropped in value in the wake of the economic crisis of the 1990s.

Use of the dollar was banned after the North passed improvement measures for economic management in July 2002, but this move eventually failed. Pyongyang has not yet released new rates of official foreign exchange following its revaluation of the North Korean won early this month.