Report: NKorea ups limit for currency exchange

AP News
Posted: Dec 15, 2009 4:17 AM

North Korea raised the amount of old currency that citizens can turn in for new bills after merchants rioted against the rules, a news report said Tuesday.

North Korea redenominated its national currency, the won, late last month, limited the maximum amount of old bills that could be converted into new ones and told its people to deposit the rest in government-run banks.

The sudden move has reportedly touched off anger and frustration, especially among middle-class merchants holding large amounts of cash amid concern it would be difficult to get their money back from banks or they could be investigated over the source of their assets.

Merchants hit hard by new currency rules rioted in the eastern coastal city of Hamhung on Dec. 5-6 and many people supported the protest, South Korea's mass-circulation Chosun Ilbo newspaper said, citing unidentified sources inside the North.

In an attempt to allay the anger, the government raised the amount of old bills convertible into new currency to 500,000 won per individual from previous 100,000 won on Dec. 6, the newspaper said.

The regime also assured citizens that the rest can be converted through bank deposits, that they won't be questioned if their deposits are no more than 1 million won, and that money in excess of 1 million won could also be exchanged through deposits if they explain how they accumulated the assets, according to the report.

South Korea's spy agency said it could not confirm the report.

North Korea appears to be using threats as well to rein in any possible unrest over the currency reform.

The Seoul-based aid group Good Friends said in a newsletter Tuesday that authorities publicly executed a citizen in the northeastern city of Chongjin on Dec. 6 after he incinerated a pile of old bills at home over concern he could be investigated over how he amassed the money.

Seoul's Vice Unification Minister Hang Yang-ho dismissed the possibility of any widespread unrest in the North, telling lawmakers Tuesday that the new rules are having little effect on ordinary North Koreans as they did not have much money to convert, according to Yonhap news agency.

The North Korean won was previously officially traded at 145 to the dollar, but more than 3,000 were needed to buy $1 on the black market, according to Dong Yong-sueng, a senior fellow at Samsung Economic Research Institute in Seoul.

The overhaul of the won _ the most drastic in 50 years _ appears aimed at curbing runaway inflation and clamping down on street markets that have sprung up. The government is also retaking control of the economy from the hands of merchants, analysts say.