The US dollar could have to deal with another bitter rival. North Korea has teamed up with Iran and Russia to forge ahead with the de-dollarization campaign. It seems that Iran and Russia alone have not been able to undermine the US dollar’s reign.
The North Korean authorities are making every effort to reinforce the national currency, the North Korean won. According to the new policy, the government decided to ban the use of foreign currencies, including the US dollar and the Chinese yuan. The South Korean intelligence found evidence that an influential shady trader who supervised most informal marketplaces in Pyongyang was arrested by a North Korean security agency and executed. Besides, all so-called free markets in North Korea are barred from exchanging dollars.
The reason behind the state ban on foreign currencies could be a depreciation of the national currency. In the fall 2020, North Korea’s Supreme Leader Kim Jong-un permitted enterprises and peasants to sell up to 70% of their goods and produce in the free market. As a result of this directive, the country revealed some traces of the market economy. To the discontent of the authorities, the Koreans took a keen interest in commerce. So, the government tightened control over the robust trade to prevent a crash of the North Korean won.
Analysts reckon that such a crackdown on foreign currency exchange is doomed to failure. People are willing to save up as much money in foreign currencies as possible as they want to wait out until the authorities eventually soften restrictions.