North Korea executes forex trader as Kim tightens grip on economy

North Korea has executed a currency trader as part of a crackdown on foreign exchange markets, according to South Korea’s spy agency, as supreme leader Kim Jong Un tightens his grip over the economy.

Kim Byung-kee, a member of the South Korean National Assembly’s intelligence committee who was briefed by the intelligence service on Friday, said the execution was the latest in a series of “unreasonable” measures by Mr Kim as North Korea struggles under the Covid-19 pandemic and international sanctions.

The execution followed a near 20 per cent appreciation of North Korean won against the US dollar in recent months, one of the biggest movements in years, according to prices published by Daily NK, a Seoul-based website that tracks market rates in different North Korean cities. The sudden change highlights rising instability in the economy, worrying Pyongyang. 

Analysts said the local currency’s appreciation followed a crackdown on dollar-based transactions as Pyongyang strengthens control of the economy after years of market liberalisation.

Andrei Lankov, a North Korean expert at Kookmin University in Seoul, said there had been signs of “significant changes” in the currency situation since October after years of “remarkable financial stability”.

“For a long time under Kim Jong Un, they did not intervene with private businesses at all . . . they not merely tolerated but encouraged decentralisation, and the switch to market relations between industrial enterprises and individuals. Now they are trying to back-pedal,” he said.

Mr Lankov added that the execution would send a warning to the public about acting against the regime’s directions over foreign currency usage. Following Pyongyang’s catastrophic sudden currency revaluation in 2009, foreign currencies have become widely used in border trade and private market transactions, particularly the US dollar and the Chinese renminbi.

There is uncertainty among North Korean observers about the pandemic’s reach into the isolated state. Pyongyang has not publicly confirmed any Covid-19 cases after implementing a swift lockdown of its borders in January, ahead of most other countries. However, the claim of zero infections has been met with scepticism by international experts and officials.

The crackdown on forex traders and tightening of control over currency markets comes as Mr Kim struggles against the economic fallout from the pandemic and the subsequent plunge in trade with China. These challenges have been compounded by crippling economic sanctions and devastating typhoons and flooding this year.

Go Myong-hyun, a research fellow at the Asan Institute for Policy Studies, a Seoul-based think-tank, said the change in approach was a blow to Mr Kim who had “claimed credit” for economic development since he took power in 2011.

“Between 2010 and 2017, North Korea’s level of imports was going up, the level of exports was going up and [Mr Kim] was showcasing major public projects in Pyongyang,” he said. “Now he cannot do that any more because he is running out of money. That is the reason why he is reasserting control over the market.”

Mr Go also noted that North Korean state media have increased calls for self-reliance and replacing imports with more domestically sourced products. 

“These are essentially expressions that the North Koreans have to tighten their belts,” he said.

The Kim regime has long faced criticism for diverting funds from the impoverished public to develop weapons of mass destruction. Last month, Mr Kim presided over the country’s biggest military parades in years, unveiling the world’s largest mobile intercontinental ballistic missile and highlighting his continued focus on developing nuclear weapons despite the worsening economic crisis.

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