The North Korean Won (KPW) is the official currency of North Korea, primarily regulated by the Central Bank of North Korea (CBNK).

Despite North Korea’s largely closed economy, the KPW plays a central role in local transactions. However, severe economic sanctions and limited international acceptance restrict its use in global commerce.

What is North Korean Won (KPW)?

The KPW serves as the primary currency for transactions within North Korea. The global market does not easily exchange it, making it one of the least convertible currencies in the world.

Foreign visitors and diplomats often use other currencies like the U.S. Dollar or the Chinese Yuan instead, as the KPW lacks wide international circulation.

History of the North Korean Won (KPW)

Introduced in 1947, the KPW replaced the Korean yen after Korea’s liberation from Japanese rule. Over time, the currency faced multiple revaluations to curb inflation, with significant redenominations in 1959, 1979, and 2009. 

These changes aimed to control rising inflation but had mixed results due to North Korea’s command economy and restrictive policies. Reforms have sometimes led to significant hardships for North Koreans, especially when the government banned old won notes without adequate compensation.

Denominations North Korean Won (KPW)

The KPW is subdivided into 100 chŏn, although coins are rarely used due to their limited purchasing power. The North Korean won is available in a variety of banknotes, including denominations of ₩5, ₩10, ₩50, ₩100, ₩200, ₩500, ₩1,000, ₩2,000, and ₩5,000. These notes cover most daily transaction needs within North Korea. The won is further divided into 100 chŏn. Coins, minted in denominations of 1, 5, 10, and 50 chŏn, as well as a ₩1 coin, are used less frequently due to inflation and limited purchasing power.

KPW’s exchange rate

The KPW’s exchange rate on the black market is highly volatile, with rates fluctuating due to policy changes, sanctions, and speculation. The government fixes the official rate at around 8,900 KPW per U.S. dollar, but the black market rate can reach as high as 16,000 KPW per dollar, depending on economic conditions. Here’s a snapshot of the unofficial KPW exchange rate for major currencies:

• U.S. Dollar (USD): 1 USD = 16,000 KPW
• Chinese Yuan (CNY): 1 CNY = 2,300 KPW
• Euro (EUR): 1 EUR = 17,000 KPW
• Japanese Yen (JPY): 1 JPY = 110 KPW
• Nigerian Naira (NGN): Due to limited data, estimates suggest 1 NGN = 45 KPW.

Economy and Challenges

North Korea’s economy, heavily impacted by sanctions and limited trade, relies on state-controlled production and imports mainly from China. The economy faces challenges from these international restrictions, limited access to technology, and recurrent natural disasters. Inflation, driven by a scarcity of goods and foreign currency, often destabilizes the KPW’s value. To manage the exchange rate, the government periodically attempts crackdowns on illegal currency exchanges, though this can exacerbate inflation and scarcity of foreign currency.

Conclusion

The North Korean Won (KPW) reflects the broader challenges of North Korea’s isolated economy, limited by state control and global sanctions. While the currency serves essential domestic functions, its exchange rate fluctuates significantly, indicating the broader economic struggles faced by North Korea. The currency’s restricted international use also highlights the impact of the country’s political isolation on its economic flexibility and growth potential.