Despite economic support from Russia, prices within North Korea remain unstable. On May 19, analysts pointed to excessive government interference and the possibility that Russia’s assistance may be less impactful than previously assumed.
Lim Soo Ho, a National Security Strategy Institute researcher, highlighted these trends in a report titled “Recent Background and Implications of the Surge in North Korean Market Exchange Rates and Prices.” Lim noted that North Korea’s won began to surge from April to June last year and continued rising until early January 2025. Although it appeared to decline slightly in mid-January, the rate resumed its upward trend in March.
According to Lim, North Korea’s market exchange rate hovered around 8,000 KRW (approximately 6 USD) for over a decade, from 2013 to May last year, excluding the COVID-19 border lockdown period. He emphasized that, aside from that anomaly, the country is experiencing one of its most unusual economic episodes in years.
Lim cited a government decree from April last year banning individuals from using foreign currency and punishing informal currency exchangers. This crackdown triggered the rise of a black market and a subsequent surge in exchange rates.
“It’s notable that despite authorities effectively re-allowing foreign currency transactions in March, the high exchange rate has persisted,” Lim explained. He attributed this to lingering distrust among the public, who fear that currency restrictions could be reimposed at any time.
Lim suggested that this fear discourages residents from freely using foreign currency, as they worry that current transaction records might be used against them later.
He also linked the exchange rate hike to rising prices. As the won weakens, imports of staples like rice and grains shrink, likely pushing domestic food costs. While Russian economic support could alleviate some of this strain, Lim concluded that current assistance seems insufficient. He speculated that hard currency earned through arms exports or troop deployments may have been funneled into non-economic priorities.
“Due to widespread distrust in the system and growing demand for intermediate imports to support various construction projects, exchange rates are likely to remain elevated,” Lim warned. He also predicted that once somewhat eased, food shortages could resurface, particularly among low- and middle-income citizens.
Separately, Jeong Seun Ho, chair of the Department of Northeast Asian International Trade and Logistics at Incheon University, echoed similar concerns in a commentary for the East Asia Institute. He assessed that North Korea’s provision of troops and military supplies related to the Russia-Ukraine conflict has yielded only limited economic compensation from Moscow.
Jeong identified several structural obstacles to expanded North Korea-Russia economic cooperation, including poor logistics infrastructure, excessive transportation costs, and a lack of complementary trade frameworks between the two countries.
He added that North Korea’s expectations may be focused less on economic aid and more on acquiring advanced military technologies. In response to these dynamics, Jeong emphasized the importance of a more refined and strategic diplomatic approach from South Korea toward China and Russia.