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N Korea cash switch 'sparks panic'
Surprise currency redenomination wipes out savings for thousands, activist groups say.
Last Modified: 03 Dec 2009 07:41 GMT
North Koreans have been given a week to change old bank notes to the new currency [GALLO/GETTY] 

A surprise decision by North Korea to redenominate its currency has sparked panic among many North Koreans who find themselves suddenly left with piles of worthless bills, activists have said.

At least one couple was driven to suicide by the switch after finding their savings wiped out, the Daily NK, a South Korea-based online news service, reported.

North Korea announced on Monday that it was redenominating its currency, the won, giving already-impoverished residents less than a week to change a limited number of old bills into new ones.

According to one group, citing sources inside North Korea, authorities have threatened "merciless punishment" for anyone violating the rules of the currency exchange.

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.

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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
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