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North Korea has been hit by sharp changes in foreign exchange and food prices, as economic pressures stemming from the Covid-19 pandemic and international sanctions create new risks for Kim Jong Un.
Volatility will worsen the situation of many of North Korea’s 25 million people. It could also unravel the country’s unofficial market trading system, known as jangmadang, and increase instability.
The North Korean gain has appreciated around 30% against the US dollar and 40% against the Chinese renminbi since the start of the pandemic, according to the Daily NK, a website that makes a follow-up of North Korean markets.
“There is real price inflation in the market right now, which is scary. At the same time, fuel prices are quite inflated and foreign exchange prices – the dollar and the renminbi against the earnings – have fallen, ”said Peter Ward, a North Korean expert at the University of Vienna.
Pyongyang has above all isolated the country of foreign trade and aid since the onset of the coronavirus crisis, fearing the impact of uncontrolled transmission of the virus. Last year the damage to the typhoons worsened economic pressure.
Experts attributed the currency and currency movements to the combination of collapsed trade and state efforts to remove foreign currencies from domestic circulation.
William Brown, a former U.S. intelligence officer who runs a Northeast Asian economics and intelligence consultancy, said monetary stability had been a distinctive of the Kim government. This spurred the development of the market after periods of inflation and currency devaluation under his father Kim Jong Il.
The “wild swings” risked raising the level of popular despair in the country, Brown he wrote for 38 North, a program led by the Stimson Center, an American think tank. “At some point, even now, inflation may seem like a bigger enemy of stability. . . than the United States, ”he added.
Go Myong-hyun, a North Korean economics expert at the Asan Institute for Political Studies, a Seoul-based think tank, noted that Kim had ordered the country to reduce its dependence on the “disease” of Seoul. imports, according to recent movements to centralize control of the economy and squeeze the country’s elite.
“The North Korean system will avoid repeating the famine of the 1990s, the biggest story here is the North Korean regime’s efforts to suppress the market system. . . for me it is very clear that it goes after the jangmadang, “He said.
Kim’s regime is also becoming his army of hackers to raise money, experts said.
Yana Blachman, a former Israeli intelligence agency working for cyber security group Venafi, said revenue from cybercrime should be seen as a major means of revenue generation. North Korean cybercriminals have claimed billions of dollars in recent years through a a broad set of schemes aimed at banks and other institutions linked to financing, including peer-to-peer lenders and cryptocurrency exchanges.
“There are many attacks that are not being reported, especially in terms of smaller, unnoticed attacks like ransomware and cryptocurrency,” he said.
Economic problems are deeply felt by North Koreans, many of whom are already suffering food insecurity, according to deserters who maintain communication with the country’s contacts.
Kang Chol-hwan, a Seoul deserter, said food and commodity prices have risen three to ten times.
“It looks like Kim’s regime is slowly paralyzing itself,” he said.
Seo Jae-pyeong, another fugitive, said China’s food assistance levels appeared to be falling, despite previous signs of increase in shipments.
“Asking how many meals people have isn’t the right question,” Seo said. “The question should be whether the soup is thin or thick.”
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