North Korea targets currency traders with undercover operatives as won crisis deepens

North Korea has drawn its sharpest response yet to a currency crisis, deploying undercover security cadets and newly assigned officers to crack down on illegal foreign exchange trading in markets across the country.

A source in Ryanggang province told Daily NK on Thursday that the Cabinet and the Ministry of Social Security issued a directive on March 3 concluding that lax law enforcement was the root cause of the market exchange rate problem, and ordering security officers to forcibly drive down the rate “even through coercive means.”

According to the source, the North Korean won-to-dollar market exchange rate surpassed 40,000 won (approximately $28 at the official rate) last August and has remained at that level ever since. After investigating the cause, the Cabinet and Ministry of Social Security concluded that collusion between market-assigned security officers and currency traders was responsible for the rate’s persistence.

In response, the Ministry of Social Security issued a personnel order to immediately replace market-assigned security officers deemed to have failed in their supervisory duties. The directive called for newly assigned officers who had recently graduated from the Ministry of Social Security’s Political University, described as driven and idealistic, as well as officers within the ministry with a reputation for diligence and integrity. The stated aim was to ensure strict enforcement of laws and regulations without corruption or collusion with currency traders.

Undercover cadets deployed to markets

Beyond the personnel reshuffle, the Ministry of Social Security also ordered undercover investigations inside the markets. Students still enrolled at the Political University who have not yet graduated are to be embedded in markets to conduct covert operations. Together with the newly rotated officers, these student agents are tasked with rooting out the exchange rate problem.

The source said the Cabinet and ministry have ordered a reporting system to be established specifying who exchanged dollars, where, with whom, and in what amounts. Authorities have set a deadline of Sept. 9 — North Korea’s Foundation of the Republic Day — to completely eliminate the use of foreign currency and illegal exchange inside the markets, with the goal of forcibly raising the value of the North Korean won.

Market traders in Hyesan, particularly vendors in the city’s main markets, are watching the developments with considerable anxiety. The prospect of Political University students infiltrating markets in plainclothes has reportedly triggered especially acute fear. Because the students are unknown faces who can approach currency traders without suspicion, traders say the likelihood of being caught is high, with many warning that a sweeping crackdown will follow.

“If young officers or fired-up Political University students come in, they’ll go after people without mercy,” one local market participant was quoted as saying. Others pushed back on the premise of the crackdown entirely, with some asking whether the exchange rate’s stubbornness was really the fault of older officers.

The source noted that deploying Political University students is a recurring tactic whenever authorities want to solve a problem, adding that many North Korean people are anxious about what comes next. “There are many people worried about how much the markets will shrink if authorities crack down on them under the political banner of implementing the decisions of the Ninth Party Congress,” the source said, “and how much more precarious people’s livelihoods will become.”

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