N Korea cash switch 'sparks panic'

Surprise currency redenomination wipes out savings for thousands, activist groups say.

    North Koreans have been given a week to change old bank notes to the new currency [GALLO/GETTY] 

    North Koreans are reportedly entitled to change up to 150,000 old won to new won, at a rate of 100 to 1.

    Under current black market rates, 150,000 won is worth about $60.

    Cash in excess of the allowed amount has to be saved in government-run banks, South Korean media said, although it was not clear whether residents would be able to change that money as well into new bills.

    Black market

    According to South Korea's Yonhap news agency, the surprise announcement sent many North Koreans rushing to the black market to convert hoarded bills into US dollars and Chinese yuan.

    The switch is thought to be part of a crackdown on unregulated private markets [Reuters]

    Shops, restaurants and other businesses have closed while the switch is taking place.

    Groups in South Korea with contacts in the North say the move has hit private market traders with large hoards of the old currency particularly hard.

    In one case guards blocked the entrance to a bank in the city of Hoeryong after a stampede of people trying to offload old banknotes, the Seoul-based Network for North Korean Democracy and Human Rights said, citing unidentified sources.

    Analysts have said the surprise switch appears to be part of a government crackdown on private markets, which have become an essential part of the food-supply system in aid-dependent North Korea.

    In depth


     
    North Korea: A state of war
     N Korea's nuclear trump card

    Videos:
     
    101 East looks at the future of North Korea
     A rare look at life inside North Korea

    The markets, which have gradually emerged across North Korea in recent years, have become a profitable business for some traders.

    But their growth outside of government controls is believed to have unnerved authorities.

    Faced with mounting food shortages, rigidly-controlled North Korea began allowing some private markets including farmers' markets to begin trading in 2002.

    The markets have encouraged trade and boosted the supply of food, but they also become a source for banned goods such as films and soap operas from South Korea, which the government sees as a threat to its rule, analysts say.

    North Korea's largest wholesale market, in the capital Pyongyang, was reportedly closed in mid-June.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Revival: The Muslim Response to the Crusades

    Revival: The Muslim Response to the Crusades

    This part of 'The Crusades: An Arab Perspective' explores the birth of the Muslim revival in the face of the Crusades.

    Going undercover as a sex worker

    Going undercover as a sex worker

    A photojournalist describes how she posed as a prostitute to follow the trade in human flesh.

    Africa is not poor, we are stealing its wealth

    Africa is not poor, we are stealing its wealth

    It's time to change the way we talk and think about Africa.