KPW - North Korean Won

The history of the formation and development of the North Korean Won (KPW)

On December 6, 1947, the North Korean Won was officially introduced for the first time, replacing the previous Korean Yen. The KPW was introduced shortly after North Korea became an independent nation and was separated from South Korea after World War II. The first KPW was valued at par with the South Korean Won.

In 1959, North Korea implemented a currency reform, issuing a new Won with an exchange rate of 100 old Wons = 1 new Won. The economy of North Korea faced difficulties, causing this currency to depreciate against international currencies.

In 2009, another significant monetary reform took place. This reform aims to curb inflation and promote domestic economic growth. 

Today, the North Korean Won is strictly controlled by the government and only holds domestic value. Therefore, the official exchange rate and the black market rate of the North Korean Won are very different.

North Korean Won (KPW) Denominations

The denominations of North Korean won (KPW) banknotes currently issued and used include: 

North Korean Won banknotes

• Commonly used: ₩100, ₩200, ₩500, ₩1,000, ₩2,000, ₩5,000.

• Rarely used: ₩5, ₩10, ₩50.

North Korean Won coins

North Korean Won coins are rarely used (1, 5, 10, 50 chon, ₩1).

North Korean Won (KPW) exchange rate

The official exchange rate of the North Korean Won (KPW) is currently tightly controlled by the government, so it is not publicly transparent.

The KPW exchange rate on the black market fluctuates significantly compared to the actual rate. Specifically, 1 USD can be exchanged for thousands of North Korean Won, a significant difference compared to the official announcements from the North Korean government, which state that 1 USD can be exchanged for a few hundred North Korean Won.

The KPW is not traded on the international foreign exchange market and does not have widespread recognition. This makes it difficult for the KPW to be used outside the borders of North Korea like foreign currencies such as USD, EUR, and KRW.

The North Korean won only exists within the closed financial system of North Korea. Therefore, we cannot compare the value and stability of this currency.

Factors affecting the value of North Korean Won (KPW)

Below are the factors affecting the value of the North Korean Won, reflecting the economic, political, and monetary policies of this country. Specifically as follows:

North Korea's centralized and self-sufficient economic policy

This country follows a centralized and self-sufficient economic model. The government will control all economic activities. Therefore, the economy's lack of global integration renders the KPW almost worthless on the international market.

The situation of international isolation and sanctions

North Korea faces strict sanctions from the United Nations due to its nuclear and ballistic missile testing activities. Therefore, it limits export capabilities and makes the national economy even more difficult.

Strict government control

The North Korean government tightly controls the use of foreign currency, such as holding or using USD or CNY within the country. In fact, many North Koreans use it to protect their assets against the depreciation of KPW. Therefore, it causes the KPW to depreciate and be less trusted in daily transactions.

National political and military situation

North Korea follows a dictatorial political ideology and has a strong impact on the economy. The government focuses most of its resources on the military and nuclear weapons instead of the economy.

Dependence on China

Despite being economically isolated, North Korea still maintains a strong trade relationship with China. Therefore, the demand for the renminbi for North Korea to purchase goods from China has driven the use of the CNY, causing the value of the KPW to continue to decline.

The value of the North Korean Won (KPW) is heavily influenced by the centralized economic system, international isolation, inflation, strict government control, and the military political situation. These factors cause the KPW to lose its real value, become isolated from the international market, and lead to a significant disparity between the official exchange rate and the black market rate.

Future of North Korean Won (KPW)

The future of the North Korean Won (KPW) remains a subject of considerable speculation, influenced by a combination of internal economic reforms and external geopolitical dynamics. Despite the government's efforts to stabilize the currency through various monetary and fiscal policies, including managed exchange rates and limited market liberalization, the KPW has historically struggled against significant inflationary pressures and persistent economic isolation. Additionally, the potential for improved relations with the international community could present opportunities for economic development and the strengthening of the KPW. However, the overarching uncertainties surrounding North Korea's political landscape and its adherence to reformist policies will play a crucial role in determining the currency's viability and resilience in the years to come. As such, stakeholders must remain vigilant to the evolving circumstances that could impact the KPW's future stability and value.