Kim Jong Un Comes Round to Talks While His Currency Reserves Shrink - Only4Free - Cryptocurrency Connection

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Kim Jong Un Comes Round to Talks While His Currency Reserves Shrink

Kim Jong Un Comes Round to Talks While His Currency Reserves Shrink

Kim Jong Un’s enthusiasm for talks on North Korea’s nuclear program coincides with a sharp drop in his nation’s foreign currency reserves.

Sanctions that hurt North Korea’s economy by limiting exports in 2017 will this year drain its cash hoard enough to crimp imports of essential products, according to analysts in South Korea.

An additional risk for the regime in Pyongyang is a spike in inflation, the Korea Institute for International Economic Policy, based in Sejong south of Seoul, said in a report last month. Another research group in Sejong, the Korea Development Institute, warned of an economic downturn in North Korea.

Kim Jong Un meets with South Korean envoy Chung Eui-yong in Pyongyang on March 5

The isolated nation has a history of dangling the prospect of a negotiated settlement on its nuclear arsenal, and then walking away after getting concessions. This time Kim has agreed to meet South Korean President Moon Jae-in for talks in the border village of Panmunjom and U.S. President Donald Trump has signaled he’s open to discussions.

“If estimates on North Korea’s foreign-currency reserves are accurate, imports will drop in 2018 and lead to a decline in activity at private markets and in industrial production from the second half,” wrote Choi Jang-ho, a researcher at the Korea Institute for International Economic Policy. “The disruption to imports of raw materials and crude oil will mean changes are inevitable for Kim Jong Un’s industrial policies.”

North Korea’s exports to China -- its biggest trading partner -- plunged 37 percent in 2017 while imports edged up by 4 percent, leaving a goods trade deficit of $1.7 billion, data compiled by South Korean agencies show.

Source: Korea International Trade Association

Choi estimates that North Korea’s foreign currency reserves are only about $4 billion to $5 billion, compared with the South’s $395 billion. While measures of Pyongyang’s reserves are sketchy, its dollar holdings could dry up by around October if international sanctions continue, Kang Seok-ho, the chairman of South Korea’s parliamentary intelligence committee, said last month.

The relative stability of North Korea’s won and prices for goods at markets in the nation could change this year, according to Choi. Up until now, a flow of dollars held by the private sector flowed into the markets, he wrote.

Source: Daily NK (A Seoul-based website with informants inside North Korea)
“North Korean authorities may have been able to control prices for a short term, but they can’t do that for ever and prices of products affected by sanctions will start to move upward,” said Lim Kang-taeg, a researcher at another think tank, the Korea Institute for National Unification. “Concerns over a military strike by the U.S. and the pressure from economic sanctions are likely to be behind North Korea’s change of attitude.”


Tags: currency, cryptocurrencies, cryptocurrency, crypto news, bitcoin, bitcoin news, Kim Jong Un

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