World and Nation

North Korea apologizes for currency change blunder

SEOUL, SOUTH KOREA —The North Korean government has made a rare apology for a policy blunder and lifted a ban on using foreign currency, South Korean news organizations said Thursday.

Recent changes to the North Korean monetary system had set off an unusually public outcry against the North Korean government. If confirmed, the apology and the policy reversal are further signals that the North is retreating from its campaign against the free markets that have proliferated in the impoverished country.

After years of struggling to contain the markets, which are technically forbidden, North Korea took its boldest step yet by abolishing its old bank notes in late November. The government allowed people to exchange only a limited amount of old money for the new currency, at a rate of 100 to 1, a measure that effectively wiped out much of the private wealth that had been accumulated by entrepreneurs who profited from the markets.

The government also banned the holding or use of foreign currency, which is widely used to smuggle in basic goods from China.

The policy backfired. Prices skyrocketed as market activities ground to a near halt, while state-run stores failed to meet the demand for goods.

In recent weeks, Web sites based in Seoul that collect news from sources inside North Korea have reported instances of starvation in some towns in the North, a protest rally by elderly military veterans and arguments between women and the soldiers trying to shut down markets.

The reported apology, from the North Korean prime minister, Kim Yong-il, came just days after South Korean news outlets reported that the North Korean leader, Kim Jong-il, fired the senior official who had spearheaded the currency changes.

The apology came at a meeting in the North’s capital, Pyongyang, on Feb. 5, according to the Chosun Ilbo, a newspaper in Seoul. Its report, published Thursday, quoted Prime Minister Kim as saying, “I offer a sincere apology about the currency reform, as we pushed ahead with it without sufficient preparation and it caused a great pain to the people.” The paper’s account, published Thursday, quoted an unidentified source inside the North.

“We will do our best to stabilize people’s lives,” the prime minister said, according to the newspaper.

The South Korean national news agency Yonhap carried the same report on Thursday.