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In hard-line move, N. Korea prohibits foreign currency

SEOUL, South Korea — North Korea has banned the use of foreign currency, another sign its hard-line communist government is intent on reasserting control over the country's nascent market economy.

Reports say the decree warns of severe punishment for anyone using U.S. dollars, euros, yuan and other non-North Korean currencies. Foreign currencies previously were accepted in some shops, restaurants and other outlets, particularly those catering to foreigners.

The order, issued by North Korea's state security bureau and going into effect Friday, aims to "forbid the circulation of foreign currency," China's state-run CCTV television said in a brief report late Wednesday.

The Daily NK, a Seoul-based online news outlet, said the order prohibits all individuals and organizations apart from banks from possessing foreign currency.

The order comes weeks after the government redenominated North Korea's currency, the won, as part of a far-reaching currency overhaul aimed at curbing runaway inflation and reasserting control over the economy.

The restrictions come as impoverished North Korea faces tightened sanctions for its nuclear defiance that have curtailed its arms exports and other traditional sources of hard currency.

Unable to feed its people, the government began allowing some markets in 2002, including some permitting farmers to trade in produce.

While an economic success, the markets also sold banned goods such as movies and soap operas from rival South Korea.

The currency overhaul sought to rein in those who had profited from market commerce by ordering North Koreans to exchange a limited amount of the old bills for new ones, and to deposit their savings in banks.

The redenomination reportedly sparked anger among North Koreans who fear they may never be able to withdraw the deposits. Authorities ordered border guards to open fire on anyone who crosses the North Korean border without permission, an apparent attempt to thwart defections by people disgruntled over the currency reform.

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