Thursday, December 3, 2009

Brother, Can You Spare A Won?

The North Korean government briefly threw their country into chaos as they announced a revaluation of the North Korean currency, the won. North Korea is basically taking the Zimbabwean approach to controlling inflation - they're just dropping zeros off the end of their currency, in the case of North Korea, two zeros - so your 1,000 won note is now a 10 won note.

North Korea is actually ordering people to exchange their old won for new, but capping the amount they can exchange at between 100,000 and 150,000 won. The problem for North Korea is that many people, according to the New York Times, stockpiled won to buy necessities during the lean winter months, they're now likely to be stuck with a lot of now useless paper.

The currency revaluation is also widely seen as a move to rein in North Korea's booming black market, since the black marketeers will not want to get stuck with huge piles of soon to be worthless old won that they can't exchange. In recent years the black market in all sorts of goods has boomed as the state-run economy has faltered. Because of years of failed harvests and economic sanctions, the North Korean government has put tight controls in over what items are available for sale in the marketplace, who can buy them, and when - all factors that drive the black market.

(photo Yonhap News, South Korea)
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