North Korean authorities recently allowed residents to purchase food using foreign currency, Daily NK has learned. This comes amid efforts by the North Korean authorities to provide food to the population at lower than market prices.

The move suggests that authorities have adopted a strategy to absorb more foreign currency, as severe international sanctions and the COVID-19 pandemic amplify the country’s economic woes.

A source from North Hamgyong Province told Daily NK on Tuesday that authorities recently issued an order allowing people to use foreign currency when shopping for food at state-run grocery stores. As a result, many people bought yuan food from stores located across Hoeryong.

According to the source, the authorities emphasized in the order that people can use foreign currency in accordance with “local characteristics”. In short, North Korean leaders want to make sure that people can use the foreign currency in their possession – whether it is yuan or dollars – to buy the items they need.

In fact, when the authorities provided 10 days of food per family in mid-September to mark the founding of the country on September 9, they told the people of Hoeryong that “Chinese money can be used. [to make the purchases]”And that” it is more advantageous [to use Chinese money] rather than the national currency [KPW] to buy things. ”

Tongil Market in Pyongyang / Image: Daily NK

Generally speaking, residents of Pyongyang and other areas far from the Sino-North Korean border use US dollars when shopping, while residents living in areas along the border – such as North Hamgyong, Yanggang and North Pyongan provinces – use Chinese yuan.

When the food was provided earlier this month, state-run food stores in Hoeryong sold a kilogram of rice for 4 yuan, 55 jiao. Using the RMB-KPW exchange rate as of September 12 (1 RMB = 700 KPW), this means that North Koreans were able to buy food for the equivalent of 3,190 KPW.

In fact, buying rice in yuan made it 800 KPW cheaper than in local currency (rice cost 4000 KPW per kilogram). The source said that many locals had therefore tried to buy food using yuan.

In short, the city’s North Koreans believed they could buy rice cheaply, while authorities believed they could get foreign exchange, even if the state suffered financial losses.

The North Korean authorities have maintained their strict ban on the use of foreign currency in the markets. Overall, authorities appear to be using several techniques to ensure that currency flows “naturally” into state coffers, the source said.

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