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N. Korea revalues currency for first time in 17 yrs: sources

All Headlines 07:25 December 01, 2009

SHENYANG, China, Dec. 1 (Yonhap) -- North Korea has sharply raised the value of its currency, its first such move in 17 years, apparently aimed at tackling inflation and clamping down on black market trading, sources here said Tuesday.

North Korean sources who engage in trade with China told Yonhap News Agency that the North Korean government implemented the currency reform as of 11 a.m. Monday and the exchange for the new currency began at 2 p.m.

The exchange rate for new currency is 100 to 1, in which the old denomination of 1,000 won is replaced by the new 10 won, the sources said, speaking on strict condition of anonymity. The drastic revaluation disturbed the local market, they said.

"Many citizens in Pyongyang were taken aback and in confusion. Those who were worried about their hidden assets rushed to the black market to exchange them with yuan or U.S. dollars. The yuan and the dollar jumped," one of the sources said.

The revaluation was the first for North Korea since 1992. Since its government was founded in 1947, North Korea has also undertaken 1 to 1 currency exchanges four times.

The latest move appeared to be mostly aimed at tackling inflation as the local currency value has nosedived since the country took economic reforms in 2002 to make payments and prices more realistic and introduce market freedom. North Korea also may have sought to draw out money hidden in the underground economy, some stashed by citizens working abroad.

North Korea is also in a nationwide campaign to rebuild its economy by 2012, the birth centennial of its founder, Kim Il-sung.

South Korean officials were cautious about the report, as North Korea has yet to make an official announcement as it did in 1992.

"We cannot confirm the report," an official at the Unification Ministry said.


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