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| China-Japan-Koreas |
| N. Korea acknowledges failure of currency reform |
| 2010-03-03 |
| [Kyodo: Korea] North Korea has acknowledged the failure of the currency reform it conducted last November, saying it caused confusion in the supply of money and the distribution of goods, sources familiar with China-North Korea relations said Tuesday. North Korea made the acknowledgement in a note sent to its diplomatic missions abroad in mid-February, the sources said. The note urged North Koreans to ''get united and overcome the difficulty,'' they said. It is rare for North Korea to acknowledge a failure of economic policy. The acknowledgement suggests the failure dealt a severe blow to North Korea's efforts to rebuild its economy, a key to achieving Pyongyang's goal of ''opening the gate to a great, prosperous and powerful socialist nation'' in 2012. North Korean officials ''do not need to deny'' the confusion sparked by the redenomination of the currency when explaining it externally, the note said, according to the sources. By acknowledging the problem, Pyongyang is believed to have been attempting to ease the sense of alarm among foreign companies about trading with and investing in North Korea. A senior South Korean Unification Ministry official quoted visitors to Pyongyang around the Feb. 16 birthday of North Korean leader Kim Jong Il as saying they saw no signs of confusion over currency at shops, hotels and restaurants in the capital. On Nov. 30, North Korea redenominated the won, knocking two zeros off its bank notes. Despite the redenomination, Pyongyang failed to curb inflation and caused confusion in the supply of goods, the sources quoted North Korea as telling Chinese investors and trading partners. Rice prices, for example, effectively rose by 15 to 30 times after the redenomination. According to South Korea's Unification Ministry, the price of rice came to 300-600 won, or 30,000-60,000 old won, per kilogram after the redenomination, compared with 2,000-2,500 won before Nov. 30. The sources said North Korea also told Chinese investors and trading partners that it carried out the currency reform ''without sufficient preparation.'' When carrying out the redenomination, North Korea launched a ''price adjustment committee'' to set prices for goods and price caps for products sold in markets. But delays in the work made it difficult for authorities to fix new prices, forcing some shops to suspend operations for nearly a month, diplomatic sources in Pyongyang said. Similarly, the new won's exchange rates against the dollar, the euro and other currencies were not made public until early February, the sources said. According to official rates, the dollar traded at 100 won, the euro was quoted at 140 won and the yuan fetched 14 won, marking sharp depreciation of the won compared with levels prior to the redenomination. North Korea admitted that information about the currency reform had been leaked prior to implementation. The leak prompted some of the new rich in North Korea to try to move their money to China and other countries, fearing that their foreign currency holdings might be confiscated. The action prompted security authorities to tighten control of the border with China late last year, sparking speculation that the North Korean leader might visit China as early as in January. Senior officials of the Workers' Party of Korea and aides reported directly to leader Kim Jong Il about the confusion resulting from the failed currency reform, leading to the dismissal in January of Pak Nam Gi, director at the party's Financial Planning Department, and others involved in the project, according to diplomatic sources in Beijing. |
| Posted by:Fred |
| #1 ION NEWS KERALA > seems ORDINARY RUSSIAN CONSUMERS + WANNABES no longer have trust in their own country's RUBLE CURRENCY, + now prefer to use US DOLLARS OR OTHER MAJOR INTERNATIONAL CURRENCY??? |
| Posted by: JosephMendiola 2010-03-03 21:05 |