Page last updated at 14:54 GMT, Tuesday, 1 December 2009

North Korea 'in process of redenominating currency'

By Michael Bristow
BBC News, Seoul

North Korean banknotes on display in South Korea
Reports said North Koreans rushed to convert their currency

North Korea is believed to be in the process of redenominating its currency, the won.

Experts believe the move, which would knock two noughts off the nominal value of each banknote, is economically and politically motivated.

The information comes from North Korean traders in north-eastern China, next to the border with the Communist state.

The news, carried in a media report, has not yet been confirmed by Pyongyang - or by the South Korean government.

But if true, North Korean banknotes will lose two noughts, meaning a 1,000 won note ($7:£4.2) will now be worth just 10 won.

Reports say North Koreans reacted quickly when they heard the news - they tried to convert their local cash on the black market into Chinese yuan and US dollars.

Experts say the move is aimed at tackling inflation in the impoverished country.

But there could also be a political motive. North Koreans will have to exchange their old notes for new ones - in the process, the government will be able to find out just how much cash is around.

That information could help officials strengthen their control over ordinary people.

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