Something strange is happening with North Korea's currency—and while analysts aren't sure what the cause is, few believe it's a sign of a healthy economy. The official exchange rate for the North Korean won has long been around 100 to the dollar, but according to outlets including Daily NK, which has a network of informants in North Korea, the unofficial rate in local markets has surged around 25% this year and is now around 5,200 to the dollar. But currencies usually go down instead of up in troubled economies, and North Korea's economy certainly counts as one: The economy has been hit very hard by international sanctions, the pandemic, natural disasters, and a food shortage so severe that the country has reportedly tapped its emergency wartime rice reserves.
"A currency normally depreciates when a country is facing troubles, but the opposite is happening in North Korea," Kim Byung-yeon, a professor of economics at Seoul National University, tells Bloomberg. One theory is that the government is boosting the won in an attempt to support the economy, but the move could "end up harming the real economy even more," Kim says. The professor says a 90% drop in imports from China and a possible government crackdown on the use of currencies including the dollar and China's yuan may also be behind the won's unusual surge. Other analysts say that while the surge might benefit government-backed companies, the volatility is bad news for ordinary North Koreans.
Earlier this year, sources told the Daily NK that the North Korean government had ordered citizens to report any foreign currency in their possession and deposit it at banks, which, along with a ban on some mobile payment apps, was seen as a way to "more closely monitor the flow of money and to absorb foreign currency owned by ordinary people." The outlet reported this week that authorities are also cracking down on street vendors, with dozens sent to forced labor brigades after clashes with enforcers. (Read more North Korea stories.)