What Is the North Korean Won (KPW)?
The term North Korean won (KPW) is the national currency of the Democratic People's Republic of Korea or North Korea. The currency is abbreviated in the currency market as KPW and is represented by the symbol ₩.
The won is issued and managed by the country's central bank. Banknotes are valued from ₩5 to ₩5,000. One won is divided into 100 chon. Coins are produced in values that range from one to 50 chon as well as ₩1. The KPW is a blocked currency, which means it is not convertible or traded on forex markets.
- The North Korean won is the official currency of the Democratic People's Republic of Korea.
- It is abbreviated as KPW and is represented by the symbol ₩.
- The currency is managed by the country's central bank.
- Banknotes range in value from ₩5 to ₩5,000 while coins range in value from one to 50 and ₩1.
- The won is a blocked currency and non-convertible, which means that it can't be freely traded on the foreign exchange market.
Understanding the North Korean Won
The North Korean won is the official currency of North Korea. Won banknotes are printed in varied denominations. They include ₩5, ₩10, ₩50, ₩100, ₩200, ₩500, ₩1,000, ₩2,000, ₩5,000. As noted above, the won is divided into chon where one chon is equal to 1/100 of a won. Coins are minted in 1, 5, 10, and 50 chon as well as ₩1 values.
It is produced, issued, and maintained by the country's central bank, the Central Bank of the Democratic People's Republic of Korea. Along with currency management, the bank is responsible for managing the country's revenue stream and injecting capital into federal agencies. It also has oversight of several state banks. This includes the Bank of Trade, which is responsible for processing foreign transactions and foreign currencies.
The KPW is a blocked currency and is not convertible, which means it cannot be freely converted into other currencies on the foreign exchange market. The North Korean government, which keeps it under strict control, uses a special convertible won that can be used by foreign visitors who travel to and within the country.
As of August 2022, US$1 is worth roughly 900 KPW.
The North Korean won underwent a controversial, and quite costly, revaluation in November 2009. The government wanted to tighten control over the country’s markets and curb inflation, and the won proved to be its method of choice.
The goal of the currency overhaul was to tamp down inflation and take back the nation’s economy from merchants on the black market. The revaluation was at 1% of its existing value. The result was that any and all savings individual citizens had accumulated were essentially wiped out by 99%.
State control can lead to some unique monetary policy decisions. For example, in 2001 the government removed the rate of 2.16 won to one U.S. dollar, allegedly because of rumors that it was based on former Supreme Leader Kim Jong-il’s February 16 birthday.
The North Korean Economy
Getting accurate information about the North Korean economy can be very difficult. Details are very few and far between. North Korea's gross domestic product (GDP) grew annually at a rate of 0.4% in 2021 and was roughly $16 33 billion that year.
Korea was historically an independent kingdom. After the Russo-Japanese War, the Korean peninsula was formally annexed by the Japanese. Korea remained a Japanese colony from 1910 to 1945. After World War II, the Japanese forces in the northern region of Korea surrendered to the Soviet Union.
At the same time, American troops took charge of the southern region. The North and South remained in conflict with one another, culminating in the U.S.-involved Korean war from 1950- to 953, after which time the North locked down and isolated itself.
North Korea has an isolated and tightly controlled centralized economy or command economy, which is a standard component of any communist country. In this type of economy, it's the government that plans and coordinates the economy. This includes deciding the goods produced, how much and by whom, and the price at which they're sold
Poverty and civil strife increased exponentially as the private sector originally gained steam because the state couldn't provide the populace with sufficient food. Facing a food crisis, the government allowed select wholesale market activity, including farmer’s markets, starting in 2002. But as those markets developed and threatened Kim Jong-il’s totalitarian rule, he stepped in with a currency revaluation. The move effectively shut down private markets and threw the country and its citizens into a deep economic crisis.