North Koreans are allowed to exchange only between 100,000 to 150,000 won in old bills into new ones at a rate of 100:1, according to sources in the communist country. The money is being exchanged at nationwide branches of North Korea's central bank until Sunday, and the new bills are expected to begin circulating Monday.
Once the currency revaluation is completed, North Koreans who have grown wealthy through trade will only be able to retain between W100,000 and W150,000 in cash, and the rest of their savings will be confiscated.
According to the Network for North Korean Democracy and Human Rights and other organizations supporting defectors, the middle class in the North have saved up around W1 million per household, while some of the wealthy have up to tens of millions of won stashed in their closets. In North Korea, 100,000 won is enough to support a family of four for around two months. On the black market, it can be exchanged into $35 or $40. Many North Koreans sell goods in the markets in order to add to their meager salaries, which range from 4,000 to 10,000 won.
Sources in North Korea say people have been told that money above the individual exchange limit must be deposited in banks, but the state also limits individual deposits to between 300,000 to 3 million won, and people are not allowed to freely withdraw money from their accounts. This has apparently stoked tremendous anger.
During the last currency reform in 1992, authorities permitted each person to deposit up to 20,000 won in the bank, but they were later allowed to withdraw only a few thousand won. Many were unable to withdraw any money at all.
According to DailyNK, an online newspaper with informants in the North, each person is allowed to exchange up to 100,000 won into new bills, while money in excess of that limit is being exchanged at a rate of 1,000:1 or has to be deposited in bank accounts. Sources in North Korea said any large sum of money being deposited in a bank account will prompt authorities to track the source, so people are avoiding this.
It is unclear whether authorities will cut the price of goods to match the new currency or modify the exchange rate as well.
With economic uncertainty rising, prices of goods in the markets have reportedly soared between 10 to 20 times. Rice, which used to be around 2,000 won per kilogram, has soared to 40,000 won, while the cost of a block of tofu has jumped from 500 to 10,000 won.
Sources said North Koreans are publicly voicing their anger despite the increased presence of security agents on the streets to maintain control. There are accounts of people loudly cursing the government in the markets in major cities.
Banned items such as military goods, coal, oil and even machinery are apparently sold in black markets, which were one target of the latest revaluation. The free sale of food was officially banned when the state monopolized rations in October 2005, but it remains the popular in markets. Prices of manufactured goods are set by the state, but hardly any store abides by them.