UPDATE: According to the Wall Street Journal:
The revaluation was announced Monday over a cable-broadcast system that can’t be monitored outside the country. North Korea issued new notes with an exchange value of 100 to 1 — an old 1,000 won bill, for example, becoming a new 10-won note — and said people could make exchanges from Tuesday to Saturday.
The revaluation was confirmed Tuesday by China’s state-run news agency, Xinhua, which has an office in North Korean’s capital, Pyongyang. Xinhua quoted one store clerk as saying that state-run stores in the city are closed this week so employees can reprice goods.
It is the latest and most sweeping step by the North Korean regime to rein in an unofficial economy that has grown in recent years and is perceived to threaten the grip of dictator Kim Jong Il, the government and the Workers Party.
For more than a year, reports from aid groups and media outlets that specialize in North Korea have described crackdowns on markets that operate unofficially but became the center of economic activity when the state-run distribution system broke down after a famine a decade ago.
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The move will have little economic impact outside the country since the North Korea won isn’t used for trade and isn’t recognized for exchange by any country, even China, its chief trading partner and political benefactor.
Merchants in the Chinese city of Dandong, the most active border crossing with North Korea, said Tuesday that North Korean trading partners had told them about the revaluation but that they didn’t know the details. Trade on the China-North Korean border is mainly conducted in U.S. dollars and euros, so the Chinese traders said they weren’t expecting much impact on their business.
Inside North Korea, the economic impact of the revaluation is difficult to gauge since there has been no official data about the size of the North Korean economy or its banking system since the 1960s.
Until now, the won has traded officially at 135 per U.S. dollar. But defectors say that in North Korean border cities, where foreign currency is most necessary, the won has generally traded at about 2,000 to 3,000 per U.S. dollar. A typical North Korean earned about 5,000 won a day, aid workers and defectors say.
Initial reports indicated the government would allow only 100,000 old won to be exchanged for new. That would potentially wipe out the holdings of people who have earned and saved in won from market activities for years. Those who have saved in foreign currencies — which, though not illegal, is difficult for ordinary North Koreans — would appear unaffected.
