4 Jun 2013

Foreign currency favoured in Nth Korea

5:43 am on 4 June 2013

Chinese currency and American dollars are being used more widely than ever in North Korea instead of the country's own currency, the won.

Observers say it a stark illustration of the extent to which the leadership under Kim Jong-un has lost control over the economy.

Defectors and Chinese border traders say the use of foreign currency has accelerated since a disastrous revaluation of the won in 2009.

On the black market, the won has shed more than 99% of its value against the dollar since the revaluation, according to exchange rates tracked by Daily NK, a news and information website about North Korea based in Seoul.

Estimates of how much hard currency is in circulation vary, but an analyst at the Samsung Economic Research Institute in Seoul put it at $A2 billion in April study. Pyongyang does not publish economic data.

Experts say the growing use of foreign currency is making it increasingly difficult for Pyongyang to implement economic policy, resulting in the creation of a private economy outside the reach of the state.