Are DPRK hard-currency reserves expected to dry up by October?
According to Yonhap:
North Korea’s hard currency reserves are expected to dry up around October if international sanctions on the communist nation hold, the chairman of the parliamentary intelligence committee said Wednesday.
Rep. Kang Seok-ho of the main opposition Liberty Korea Party said during a party meeting that the North’s recent peace overtures toward the South, including its invitation to President Moon Jae-in to visit Pyongyang, are aimed at overcoming such economic hardship.
“I received an analysis that, if international sanctions against the North continue like this, all of North Korea’s foreign currency earnings and overseas assets will be frozen, and its dollar (reserves) will dry up around October,” the lawmaker said.
Kang didn’t say where the analysis came from, including whether it’s from the National Intelligence Service.
He said it is an assessment he drew after discussions with intelligence authorities, concluding that as a result of international sanctions North Korea held out an olive branch, including its invitation to Moon to visit the North for what would be a third inter-Korean summit.
“At a time like this, our government should further strengthen cooperation with the international community on sanctions against the North,” Kang said.
He also said the government should send a special envoy to the North and work actively to help resume talks between the U.S. and the North.
A similar prediction was made in the Joong-Ang Ilbo a couple of weeks ago:
In 2017, the North’s exports to China — the only remaining market it officially trades with — plunged by 37 percent on-year. This year, they could plummet more than 90 percent if China fully complies with the sanctions.
Despite a sharp fall in exports, imports remained unchanged, suggesting a thinning of foreign exchange reserves.
Pyongyang is estimated to have about $3 billion in foreign exchange reserves. The unregistered sum could be higher when including foreign currency hoarded away by the elite. The coffers will fall further this year. By the second half, North Korea could be short on foreign exchange.
The Joong-Ang Ilbo article offers additional data and is well worth reading.
$3 billion seems low to me, but I can’t prove it. The black market value of the won has not moved much (since 2012!), and I have to suspect that the currency traders in the DPRK have a better idea of the country’s foreign exchange reserves than I do.
I suppose we will see in the later half of this year? It is interesting to think about think about the implications of North Korea running out of foreign exchange…
Read more here:
N. Korea’s hard currency reserves expected to dry up by October: lawmaker
The effect of sanctions