Witness To Transformation Black Market Contest

March 16, 2016 7:00 AM

DPRK won to USD March 2016

One of the mysteries of the North Korean economy has been the relative stability since 2013 of the black market rate for the North Korean won. After depreciating more or less continuously for a decade, interrupted by the chaos associated with the 2009 currency reform, the black market rate appeared to stabilize abruptly as can be easily seen in the chart above.

Some commentators have ventured that this was due to improvement in the balance of payments associated with the rise of exports to China, while others have speculated that the authorities were actually engaging in auctions of foreign exchange to maintain this relative stability.

The exchange rate issue has re-emerged with the imposition of sanctions. My colleague Steph Haggard leans toward the view that the imposition of a broader set of sanctions, particularly with respect to mining, together with enhanced Chinese enforcement will generate a balance of payments cum financial crisis with uncertain implications for political stability. I am more skeptical of both the additional coverage and the likely Chinese rigor in enforcement.

But this is an empirical issue. If the sanctions bite, then one would expect to see their effects manifested in the black market rate on the won. So we decided to offer up this conundrum to the wisdom of the crowd, or at least of our readership, in this Witness to Transformation Black Market Contest. Yes, you can ply your wits against North Korean loan sharks and black market traders. Or maybe the North Korean monetary authorities. Here’s how it works.

Steph thinks that within two months, evidence of the impact of sanctions should begin to emerge. So the object of the contest is to guess the black market won-dollar rate two months hence. Since the sanctions resolution passed 2 March, we will use the first DailyNK average rate applying to the post-2 May period as the reference. So you have the next month to analyze trade data, contact spies in Dandong, or call in favors in Switzerland to inform your estimate. Whoever guesses closest to the May black market rate wins. In the event of a tie, whoever submitted their entry first wins.

Please list your estimate in the comments section below. The entry period closes 15 April.

To get you started, the most recent average black market won-dollar rate published by the DailyNK for last week was 8,150 won to the dollar; the February pre-sanctions rate was 8,200 (i.e. according to this data, the won strengthened slightly after sanctions were imposed).

The winner receives an autographed copy of Hard Target: Sanctions, Inducements, and the Case of North Korea. We have a contract with Stanford University Press, so this book will be forthcoming, inshallah. Now get on the phone to Dandong and get those entries in!


Liars N. Fools

8,200. The reason will be political and not economic. To convey a sense of a brighter future under byungjin in the lead up to the May People’s Congress, the Kim Jong Un regime will pull out all the stops to prevent any signal that things are not going fine and dandy. Hence intervention into the black market.

Of course, we could also see a tactical nuke threat against the ROK or Japan before then, in which case, we won’t care.

Rick Stewart

10,000 I’m just shooting in the dark … but have more confidence in the Chinese than, say, the Republicans or the Democrats.


8,150 ;)


8,300. I am with Marcus, no way China enforces sanctions.


8,150 ;)


7900 – The USD is firming up which can influence it. This is just a guess as there’s absolutely no correlation between the two currencies.

James Pearson

The rate in Pyongyang shops has been around 8400 since October. On the basis of how rooted that now seems to be, and the resilience in the market towards sanctions so far, I’m going to go with an average of… *wildly guesses* 8,320 won to the dollar.

James Pearson

Got back from Pyongyang a week or so ago and the rate in shops was 8000 won, as opposed to October's 8400.


just got off a call, should be 8,099

Ian McDonald

Just beating the deadline, I’ll go with 8,190 (assuming in Pyongyang) based on China once again not bothering with sanctions.

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