North Korea sure knows how to punish savers. North Korea revalued the Won by a factor of 100 making it a scenario where if you have 1,000 Won of the old notes, now you would have only 10 Won. Here is the kicker, the North Korean government put a limit to how much currency you can exchange in which is 150,000 Won which is about $60 in a country ravaged by inflation. Reports have come in that protests have broken out and commercial activity has basically halted during this process.
Chaos reportedly erupted in North Korea on Tuesday after the government of Kim Jong Il revalued the country’s currency, sharply restricting the amount of old bills that could be traded for new and wiping out personal savings.
The revaluation and exchange limits triggered panic and anger, particularly among market traders with substantial hoards of old North Korean won — much of which has apparently become worthless, according to news agency reports from South Korea and China and from groups with contacts in North Korea.
The sudden currency move appeared to be part of a continuing effort by the government to crack down on private markets, which have become an essential part of the food-supply system in chronically hungry North Korea.
In recent years, some market traders have stashed away substantial amounts of cash, while establishing themselves in profitable businesses that the government struggles to control.
Analysis: Could this be a preview on what could happen in other countries if inflation becomes a much larger threat?