Beijing - North Korean shops were closed on Tuesday pending the revaluation of the country's currency, Chinese and South Korean media reported. The North Korean Foreign Ministry told foreign diplomats that notes denominated in the old won currency would be exchanged for new notes at the rate of 100 to one, China's official Xinhua news agency reported from the North Korean capital, Pyongyang.
Pyongyang's state-run shops were closed on Tuesday and are to reopen next week once the government had set new prices, the agency quoted a saleswoman as saying.
Foreign diplomats were told that they could exchange their old won for the new currency from Monday until Sunday, it said.
South Korea's Yonhap news agency said the first revaluation of the currency for 17 years in the isolated Stalinist state appeared to be aimed at curbing inflation and reducing black-market trading.
Xinhua said diplomats were given no reasons for the previously unannounced change.
Yonhap quoted North Korean sources in the north-eastern Chinese city of Shenyang, which has close links to North Korea, as saying the sudden change had caused surprise and confusion in Pyongyang.
"Many citizens in Pyongyang were taken aback and in confusion," said one of the sources, who spoke to Yonhap on condition of anonymity.
"Those who were worried about their hidden assets rushed to the black market to exchange them with (Chinese) yuan or US dollars. The yuan and the dollar jumped," the North Korean source said.
Yang Moon-soo of the University of North Korean Studies in Seoul told Yonhap that he believed the currency reform had both economic and political aims.
"In the economic aspect, the government will be able to retrieve banknotes that people have amassed in their own coffers," Yang said.
"In that process, those who have legally or illegally stashed a large amount of money will be exposed to the government, and those who fear punishment will have to bury their illegally earned money," he said.
"There will be less cash circulating in the market and more government control of the people," Yang was quoted as saying.
Inflation his risen since the ruling Korean Workers' Party began tentative market reforms in 2002.
