On November 30, 2009, North Koreans awoke to find that their savings had lost 99 percent of their official value. Kim Jong Il’s dictatorship dropped two zeros from the North Korean won, making a 100-won note worth only one. Exchange of old currency for new is capped at 300,000 of the old won per family in bank savings and half that amount in cash. The limit is a de facto ceiling on savings, rendering worthless any currency held above the cutoff.
The sudden revaluation may be an attempt to crack down on the black markets that have long existed in the corners of North Korea’s centralized economic system. Defending the monetary change, which was imposed against a background of rampant inflation and widespread poverty, an official at the country’s central bank told a pro-Pyongyang paper in Japan that “in the future, a large share of economic activities will be subject not to the market, but the planned supply and distribution system.”
Underground currency exchange thrives in the Hermit Kingdom, as official exchange rates ignore much of the won’s weakness. South Korea’s Yonhap News reports that the “hundred-to-one” revaluation already has benefited that persistent black market, as citizens hurried to exchange their savings for Chinese yuan or American dollars. Last year a similar devaluation in Zimbabwe cut 10 zeros from the Zimbabwean dollar but failed to prevent Zimbabweans from deserting the currency en masse in favor of foreign denominations. r