NEWS,14. AND 15.06.2013

Tax raid tarnishes India's gold industry

A raid by dozens of tax inspectors on one of India's biggest gold traders this week has tarnished the reputation of an industry worth more than $70bn a year and put at risk its access to funding, a bullion importers' group said.
"The jewellers' fraternity, be it small or big, is feeling disgraced that we've been made to look so negative," Mohit Kamboj, president of the Bombay Bullion Association, told a news conference in Mumbai on Friday.
Income tax officials this week swooped on about 50 offices of RiddiSiddhi Bullions, a leading gold importer.
The raid was part of a probe into financial transactions for suspected bogus imports and exports, said Swatantra Kumar Singh, director general of investigations at the tax department.
Prithviraj Kothari, managing director of RiddiSiddhi Bullions, could not be reached by telephone for comment.
He said in an emailed statement to news media that he would cooperate fully with the authorities and described their action as a "routine survey".
The probe coincided with a drive by the government to rein in imports of gold by a country that is already the world's largest buyer of bullion. Gold imports, which hit a monthly record of 162 tonnes in May, are largely to blame for a ballooning current account deficit.
Other jewellers and dealers were also raided in Mumbai's Zaveri Bazaar, a maze of narrow streets and dilapidated shops that is home to India's biggest bullion market, Singh told Reuters in a text message.
He said on June 12 that tax officials had seized about $1.4m from Kothari's head office in the centre of Zaveri Bazaar and other offices of the company across India.
India's appetite for gold is vast, with imports hitting a record 969 tonnes in 2011. The government moved this month to tame demand with a 50% hike in import duty to 8%.
India used to ban imports of gold and most of it was smuggled into the country until the 1990s, when controls were relaxed.
Kamboj said the sensation caused by this week's raids had damaged relations between jewellers and banks, which are a major source of funding for an industry largely made up of small, family-run shops that cannot afford to carry large stocks.
"If any jeweller goes to a bank then they are treated as if they are frauds or smugglers," the association president said.

UK power prices may fall

British power prices may fall after its electricity market links more closely with others in Europe later this year, increasing cross-border trading, one of the project leaders said on Friday.
From November onwards, Britain's electricity market will be directly linked to those of Germany, France, the Netherlands, Belgium and the Nordic states via a mechanism that will distribute power automatically and more evenly between major delivery points as it is needed.
The so-called market coupling project aims to eventually integrate all of Europe's power markets to create one price for European energy consumers and to hedge against supply shocks.
Britain's power market has fewer connections to its neighbours and is less liquid than most others in western Europe, and its power prices have recently been higher.
For Britain, market coupling will bring a boost to the number of trades on its short-term market, said Bente Hagem, co-chair of the coupling project.
"Liquidity in the UK will increase for the day-ahead market through coupling. That will be positive for the price formation," she told journalists at a news conference.
Exposure to the wider market is likely to bring Britain's prices more in line with those on the continent.
The Dutch, German, French, Luxembourg and Belgian electricity markets were already coupled in November 2010, which has helped their prices converge.
Closer ties will also mean, however, that British consumers may be more prone to price changes in surrounding markets, for example those caused by extreme swings in German renewable energy production.
The European Union has set an end-2014 target for Europe's electricity markets to be fully integrated to distribute renewable energy flows and prevent energy supply crises.
The complexity of uniting trading and capacity allocation systems, however, has made meeting that deadline unlikely, said Jean-Francois Conil-Lacoste, the second co-chair of the project and head of European day-ahead power bourse EPEX Spot.
"We have a deadline of end-2014, which is very ambitious, and we can probably safely say that unfortunately we will not meet the deadline for all of Europe," he said at the same conference.
Markets in central-eastern Europe have taken the first steps to couple their regions, and south-eastern markets are also gearing up to eventually join the creation of a Europe-wide integrated market.

A surefire bet?

Puffing on slim metal tubes loaded with pale yellow liquid, two London businessmen say they have between their lips a cure for what the United Nations calls "one of the biggest public health threats the world has ever faced".
Electronic cigarettes are the future, they argue. Cheaper, cleaner and cooler than smoking, "vaping" - using a vaporiser to inhale nicotine infused with exotic flavours ranging from pina colada to bubblegum - will spell the end of tobacco.
"After I first tried this, I left half a cigarette in the ashtray and never went back," says Zoltan Kore, who co-runs the newly opened London e-cigarette shop "Smoke No Smoke".
"I'm not a smoker now, I'm a vaper," says business partner Gabor Kovacs. "The awful morning coughing fits have gone, and the waking up in the night struggling to breathe has gone, too."
Such stories - and hopes of persuading the rest of the world's billion smokers to stub out their tar and toxin-loaded cigarettes, cutting a catalogue of chronic disease risks as they do - are tantalising for public health experts.
And since "vaping" doesn't entail kicking the addiction either to the stimulant nicotine or to the behavioural habits of smoking some say it can help smokers quit much more effectively than nicotine gum or patches.
Cool alternative or dangerous gateway?
All the top tobacco companies are now placing bets on e-smokes, which some analysts predict may outsell conventional cigarettes in 10 years, raising the counter-intuitive prospect that Big Tobacco could actually help people quit smoking.
Celebrities like Bruno Mars and Courtney Love are also endorsing them, a further inducement to makers of iconic cigarette brands like Marlboro and Camel to invest.
Yet e-cigarettes are far from universally accepted as a public health tool; regulators are agonising over whether to restrict them as "gateway" products to nicotine addiction and tobacco smoking, or embrace them as treatments for would-be quitters.
A big issue is the lack of long-term scientific evidence to support the safety and effectiveness of e-cigarettes, prompting critics like the British Medical Association (BMA) to warn of the dangers of their unregulated use.
"These devices may also undermine efforts to prevent or stop smoking by making cigarette use seem normal in public and at work," argues the BMA, which has called for vaping to be banned in public places in Britain, just as smoking is.
The World Health Organisation (WHO) is equally wary, saying that until e-cigarettes have been endorsed as safe and effective by national regulators, "consumers should be strongly advised not to use any of these products".
Supporters of e-cigarettes scoff at suggestions they are a hazard or could be a slippery slope for previously addiction-free young people to get hooked on nicotine.
There is, they argue, no evidence of any harm from nicotine consumption and it would be crazy to impose tougher restrictions on e-smokes than on toxic "death sticks" that are freely available to buy on almost every street corner worldwide.
As Adrian Everett, chief executive of Britain's leading e-cigarette company E-Lites, put it in a comment to Reuters: "Comparing electronic cigarettes to tobacco is like comparing playing football to juggling live hand grenades."
Big killer
While the debate rumbles, smoking is killing half of all those who do it. Tobacco has an annual death toll of 6 million people, and that could exceed 8 million by 2030 unless something urgent is done to stop people smoking, according to the WHO.
As well as causing lung cancer and other chronic respiratory diseases, smoking is also a major contributor to cardiovascular diseases, the world's number one killer.
"This could be the most effective method of smoking reduction that we have ever had," says Konstantinos Farsalinos of the Onassis Cardiac Surgery Centre in Greece, who has conducted several studies exploring the risks of vaping.
His work, some of which has had some funding from makers of e-cigarettes, has found no adverse effects on heart function, nor any notable cancer risks to cells in the lungs.
Other research, however, suggests "vaping" may reduce lung capacity, and the German Cancer Research Centre said last month it was concerned e-cigarette liquids contained ingredients that can irritate the airways, while poor quality products could contain carcinogens.
Against this background, a growing number of regulators see a need to control standards in a largely unregulated sector.
Britain became the latest to take the plunge this week by opting to regulate e-cigarettes as non-prescription medicines, after finding widely varying nicotine levels and contaminants in some existing products. This means manufacturers will need a licence from 2016, though they will still be sold in general stores.
A few countries have banned them outright - such as Brazil, Norway and Singapore - while others are opting for varying degrees of regulation, in some cases including limits on advertising and curbs on their use in public places.
France said last month it would impose the same restrictions on e-cigarettes as on conventional ones.
The European Union is proposing to limit the amount of nicotine they can hold before regulation kicks in, while the US Food and Drug Administration has so far adopted a light touch, saying it plans to regulate e-cigarettes as it does tobacco.
Greater regulation, in one form or another, may sink smaller players that cannot afford to navigate through various licensing systems. But the rest will benefit from a halo of legitimacy.
In particular, that could play into the deep pockets of Big Tobacco - a prospect that makes some campaigners uneasy.
"Tobacco companies seem to be playing both sides of the game by selling cigarettes that cause thousands of deaths a year but also selling products designed to reduce the harm," says Martin Dockrell of British campaign group Action on Smoking and Health.
"There are some real risks here that need to be managed."
No-brainer for Big Tobacco

Big tobacco companies are jumping on the e-cigarette bandwagon with a range of strategies to tap into a market that some analysts believe could eclipse traditional cigarettes in 10 years.

They are competing with hundreds of smaller companies in the global e-smoking market, which Euromonitor estimates was worth more than $2bn in 2012.

Here is a snapshot of recent Big Tobacco initiatives:
Altria: the owner of Marlboro cigarettes maker Philip Morris said on June 11 its Nu Mark subsidiary would launch e-cigarettes under the brand name MarkTen in Indiana in August. It is the last of the large US tobacco firms to enter the space.
Reynolds American: the maker of Camel cigarettes said on June 6 it would expand the testing of its Vuse e-cigarettes to retail outlets in Colorado, beginning in July.
Imperial Tobacco: the maker of Gauloises cigarettes said on April 30 it had set up a venture called Fontem to develop e-cigarettes.
Lorillard: the maker of Newport menthol cigarettes paid around $135m in April 2012 to acquire Blu Ecigs, a leading e-cigarette company.
British American Tobacco: the maker of Kent cigarettes set up Nicoventures in 2011 as a standalone company to develop smokeless nicotine products. It already has a product, which it is working on with Consort Medical, under regulatory review in Britain.

Outlook better for global food markets

The overall outlook for supplies of basic food commodities to global markets has improved since poor wheat harvest and tight conditions a year ago,the UN's food agency said on Thursday.
The cereal supply-and-demand balance in the 2013-2014 season was expected to be "comfortable", the agency said, but it warned about the pace of imports of rice by China.
The agency said that it expected food commodity markets to be more balanced in 2013 to 2014, with rising prices on fish and meat forecast to offset lower prices for some commodities such as sugar.
The Rome-based Food and Agricultural Organisation (FAO) said in its biannual Food Outlook report that the "global food import bill is forecast to reach $1.09trn in 2013 - 13% below the record of 2011 but close to the 2012 estimate".
World sugar production was estimated to reach a new record in 2012-2013, "one that will be more than sufficient to cover projected global consumption," it said.
"After a relatively tight situation in 2012-2013, characterised by reduced grain supplies and high prices, good production prospects and a likely replenishment in world stocks could pave the way for calmer markets and some easing of prices in the new season," it said.
The news was also positive for wheat, with record world production this year boosting supplies. Lower import demand was also likely to stabilise the market and keep prices down.
"The bulk of the recovery is forecast to be concentrated in some of the major producing countries that harvested poor crops in 2012, in particular in Europe and the Black Sea region," it said.
In terms of rice, the FAO said international prices had generally been stable in the first five months of 2013, but that market attention was now "focusing on future decisions regarding releases from public stocks in Thailand and on India's availabilities for export."
The agency said the pace of China's rice imports was also "becoming critical".
International prices for meat, dairy and fish were expected to rise, the report said.
"World meat production is anticipated to grow by only 1.4% in 2013, to 308.2 million tonnes. Meat prices remain at historically high levels which, as of May, have not shown signs of decreasing in spite of reduced feed costs," it said.
Meat prices have remained at historically high levels since the early part of 2011. Export prices on average this year rose marginally for poultry and pork, remained stable for beef, and fell for lamb.
Prices of dairy products "have risen in the face of limited export supplies", and while milk production continues to increase, especially in Asia, growth in the main exporting countries is expected to be limited.
In terms of fish, tight supply and higher feed costs for several key traded species such as salmon and shrimp are pushing international seafood prices higher.
However, "overall supply is still growing thanks to aquaculture, with strong local and regional demand sustaining production growth in the developing countries," the FAO said.

Greek PM's offer on broadcaster rejected

Partners in the Greek coalition government on Saturday rejected Prime Minister Antonis Samaras's offer to partially reopen the state broadcaster, saying it had to be entirely reinstated.

Samaras triggered a nationwide uproar when he and Finance Minister Yannis Stournaras signed a legislative act shutting down ERT's television and radio stations last Tuesday in the latest austerity cutback.

But then Samaras offered to partially reinstate ERT.

"We do not agree with this proposal and we demand the immediate cancellation of the legislative act," Andreas Papadopoulos, spokesperson for the small leftist democratic Dimar party, told AFP.

Dimar is one of the three members of the ruling coalition, along with Samaras's conservatives and Pasok's socialists. The act was signed without the agreement of Dimar and Pasok.

Samaras heads the fragile coalition in a careful balancing act to enact unpopular austerity reforms in return for bailout loans from the European Union and International Monetary Fund.

Decision defended

Pasok, a pillar of the coalition, also demands ERT's reopening while recognising, like Dimar, "the need for restructuring" of the 60-year-old broadcaster.

Samaras called on Friday evening on his government partners to set up a body charged with resuming "immediately" the broadcast of information programmes before creating a new radio-television broadcaster, envisioned in a draft law presented on Wednesday by the government spokeperson.

Samaras's proposal "is not a response to what Pasok had said", a party official said.

"As soon as ERT reopens, we will agree to setting up a commission to elaborate a restructuring plan on the basis of European audiovisual bodies, which will be proposed over the next two to three months with the aim of reorganising ERT," Papadopoulos said.

In a column published Saturday in the liberal daily Kathimerini, Samaras defended his decision to shut down ERT, which he said showed his government's "political will and determination" to fight waste and lead his country out of crisis.

Samaras's administration is under heavy pressure from Greece's EU-IMF creditors to dismiss thousands of state workers to maintain access to bailout loans.

ERT has a long history of nepotistic hiring practises and government-biased news coverage, but it also provides an invaluable link to the Greek diaspora, border areas and isolated islands.

The government says it will compensate ERT's almost 2 700 employees and has pledged to set up a new public broadcaster with less than half the staff before the end of summer.

A crucial meeting on the subject is planned for Monday evening between Samaras and the heads of Pasok and Dimar, Evangelos Venizelos and Fotis Kouvelis, amid continuing protests at ERT headquarters and strikes by Greek journalists.

Obama in Africa: Great 'bang for buck'

The White House on Friday insisted President Barack Obama's looming trip to Africa was overdue and would give great "bang for the buck", pushing back at concerns over the journey's cost.
Ben Rhodes, a top foreign policy aide to Obama, admitted that the president, despite his Kenyan heritage, had focused far more on other regions, including Asia and Europe, than Africa, despite crucial US interests there.
"For the United States to say we're a world leader except in this continent doesn't make any sense," said Rhodes, a deputy national security advisor.
"The US would be ceding its leadership position in the world if the president of the United States was not deeply engaged in Africa," Rhodes said.
Obama is due to travel to Senegal, South Africa and Tanzania on a trip beginning at the end of this month for his first prolonged stay on the continent since taking office.
He has previously visited sub-Saharan Africa only once as president, with a short stay in Ghana in 2009.
Rhodes noted that Obama had travelled multiple times to the Asia-Pacific region, as part of a rebalancing of US foreign policy there and had made many trips to Europe, so Africa needed some attention.
"Africa's a critically important region of the world. We have huge interests there. You've got some of the fastest growing economies in Africa.
"You've got a massively growing youth population.
"You've got key security and counterterrorism issues that we work on with African countries," he said, adding that key US interests in combating HIV/Aids, and in supporting global health were also rooted in the continent.
"This is a deeply substantive trip and one that has been highly anticipated on the continent.
"Frankly, there's been great disappointment that the president hasn't traveled to Africa until this point other than a brief stop in Ghana."
"The president is not going to retreat from an entire continent."
The Washington Post reported on Thursday that plans for Obama to take a safari with his family in Tanzania had been cancelled due to budgetary concerns.
The newspaper, citing a Secret Service planning document, said the excursion would have required Obama's counter-assault team to carry sniper rifles with high-caliber rounds that could neutralise cheetahs, lions or other animals.
The paper said Obama's Africa tour, his first since taking office in January 2009, could cost the US government between $60m and $100m, based on cost of similar trips in recent years.
The report comes as many government agencies struggle with mandatory budget cuts that took effect in March because US lawmakers failed to strike a wider budget deal.
Hundreds of Secret Service agents are dispatched for the president's overseas visits along with dozens of vehicles, planes and other military and security assets.
The White House said that it was up to the Secret Service to determine costs and security needs for the US leader abroad - as was the case under former presidents George W Bush and Bill Clinton for instance.
Both Bush and Clinton undertook significant tours of Africa as president, requiring the vast security and logistical infrastructure that follows the US leader wherever he goes.
Rhodes, noting that other powers, including China, were seeking to increase their influence in Africa, portrayed Obama's upcoming visit as a smart investment.
"There will be a great bang for our buck for being in Africa.
"When you travel to regions like Africa that don't get a lot of presidential attention, you tend to have very long-standing and long-running impact from the visit."

US: Snowden will be held accountable

The United States is confident it will bring Edward Snowden to justice for "extremely damaging" leaks about secret internet surveillance programmes, US Attorney General Eric Holder said on Friday.

Snowden is hiding in Hong Kong and the United States has launched a criminal investigation after the former CIA technical assistant blew the lid on the National Security Agency's (NSA) vast electronic surveillance operation.
"This case is still under investigation and I can assure you that we will hold accountable the person responsible for those extremely damaging leaks," Holder told a news conference in Dublin after a meeting with EU officials.
"The national security of the United States has been damaged by those leaks. The safety of the American people and safety of people in allied nations is at risk," he said.
"I am confident that the person who is responsible will be held accountable."
Holder also said that he had agreed to share details with the European Union about the so-called Prism programme, which was exposed after Snowden spoke to British and American newspapers.
The 29-year-old Snowden has vowed to fight any bid to extradite him.

NEWS,03.06.2013

Apple e-book price-fixing trial opens

The US government's trial against Apple, accused of leading a conspiracy to fix prices of electronic books, opened in the US on Monday.
The California technology giant is on its own in its fight against the US Justice Department, after five of the world's biggest book publishers named in the suit settled the charges and paid fines.
US antitrust watchdogs say Apple orchestrated a collusive shakeup of the electronic book business in early 2010 that resulted in higher prices.
Attorneys for both sides appeared in the courtroom of Judge Denise Cote, discussing procedural matters ahead of opening arguments.
The civil trial is expected to last three weeks and comes with Apple under pressure for its slumping share price, eroding market share for its iPhones and iPads and accusations in congress it avoided billions in taxes.
Apple chief executive Tim Cook has rejected the idea of a settlement because it would call for the company to sign an admission of wrongdoing.
"We didn't do anything wrong there," Cook told a recent California conference.
"We're going to fight."
Commission
The government's case centres on a period when Amazon dominated the e-book business, offering most bestseller titles for $9.99.
Leaders of the major publishing houses held "CEOs dinners" in "private rooms at upscale restaurants" at which they discussed the threat from Amazon.
Into this environment stepped Apple, which was readying the launch of its iPad.
Rather than following the Amazon "wholesale" pricing model in which the retailer sets the price, Apple favoured the so-called "agency model" where the publishers set the price and the seller - in this case Apple - received a 30% commission.
The result was an increase in price to $12.99 or $14.99 for most books.
Apple throughout the negotiations informed the publishers of the status of its dealings with other publishers. Apple was the "ringmaster" of the "conspiracy," the complaint alleges.
The government is expected to use emails and comments from the late Apple CEO Steve Jobs, which indicated that as part of a deal to force a new pricing model, publishers should "hold back your books from Amazon."
Apple dismisses the "conspiracy" charge and said its negotiations with the publishers were "difficult and contentious."
Among the publishers named in the lawsuit last year, Penguin settled for $75m, while Hachette, Harper Collins and Simon & Schuster created a $69m fund for refunds to consumers and Macmillan settled for $26m.

Global airline profits under pressure

In 2012 the profits made by airlines around the world amounted to $2.54 per passenger. That means airlines make only about R40 profit on every air ticket they sell.

"The global aviation industry registered a combined net post-tax profit of $7.6bn. This was generated on the back of revenues of $680bn globally," said Brian Pearce, chief economist at the International Air Transport Association (Iata).

"The profits are thin and fragile. The numbers seem high but the reality is that the margins are incredibly thin."

Iata has released its latest set of financial forecasts for the industry. The outlook for Africa for 2013 is a profit of $100m for the year.

"The aviation industry is linked to global economic growth. It's clear that the global economy is still under severe pressure," said John Slosar, CEO of Hong Kong-based carrier Cathay Pacific.

Slosar said cargo is still under great pressure, especially in regions such as Europe. "I suppose this is indicative of the economic state of some areas."

Iata is hosting its 69th annual general meeting in Cape Town.

N Korea surrenders to foreign currencies

Chinese currency and US dollars are being used more widely than ever in North Korea instead of the country's own money, a stark illustration of the extent to which the leadership under Kim Jung-un has lost control over the economy.
The use of dollars and Chinese yuan, or renminbi, has accelerated since a disastrous revaluation of the North Korean won in 2009 wiped out the savings of millions of people, said experts on the country, defectors and Chinese border traders.
On the black market the won has shed more than 99% of its value against the dollar since the revaluation, according to exchange rates tracked by Daily NK, a Seoul-based news and information website about North Korea.
North Korea is one of the most closed countries in the world, so it is difficult to determine what impact this could ultimately have on Kim's regime.
But experts said the growing use of foreign currency is making it increasingly difficult for Pyongyang to implement economic policy, resulting in the creation of a private economy outside the reach of the state that only draconian measures could rein in.
For now Pyongyang appeared to be capitulating, rather than trying to stamp out foreign currency use, they said.
Estimates of how much hard currency is in circulation vary, but an analyst at the Samsung Economic Research Institute in Seoul put it at $2bn in an April study, out of an economy worth $21.5bn, according to some assessments. Pyongyang doesn't publish economic data.
The use of dollars and yuan is now so pervasive there is little Pyongyang can do about it, said Marcus Noland, a North Korea expert at the Peterson Institute for International Economics in Washington.
The government would increasingly have to force people to provide goods and services to the state and get paid in won, added Noland, who closely studies the North Korean economy.
"It's been a tug of war for 20 years where the state would like to get control of the economy, to quash the market and to get everyone to use the North Korean won, but it just doesn't have the capacity to do any of those things," he said.
"It just makes it harder and harder for them to govern. Nobody wants what they're selling."
Secret video
In the Chinese town of Changbai in Jilin province, just across the border from the hardscrabble North Korean city of Hyesan, one Chinese trader said North Korean officials he dealt with wanted yuan more than anything else, even food.
The yuan they earned from doing business quickly gets circulated into Hyesan, a city of roughly 190 000 people whose industry-based economy has slumped since the 1990s.
"The only thing they want is foreign currency," said the trader, who sells products including medicine and tea in Changbai. He declined to be identified because he did not want to jeopardise his business or endanger his North Korean partners.
In April, Daily NK posted video it said was shot secretly in February at an open-air market in Hyesan. The shaky footage showed vendors openly quoting prices in yuan for products like gloves and jackets, and one accepting payment in yuan.
Pyongyang has waged periodic campaigns to try to stop the use of foreign currency but with no success.
North Korea made circulating foreign currency a crime punishable by death in September 2012, the Paris-based International Federation for Human Rights said in a report last month.
Another group, Human Rights Watch, recently interviewed more than 90 defectors who had fled North Korea in the past two years about punishment they had received for economic crimes. None said they were penalised for using or holding hard currency.
Nevertheless, ordinary North Koreans are very careful.
"I have heard multiple stories of people hiding foreign money under the floorboards in the house, or burying it up the hill in the woods out back," said one person in northeastern China who has lived in Pyongyang and regularly interacts with North Koreans.
"Nobody puts it in the bank because nobody trusts the government."
The worthless won
Faith in the North Korean won crumbled when Kim's father, Kim Jong-il, ordered the sudden revaluation of the currency in November 2009.
The government chopped two zeroes off banknotes and limited the amount of old money that could be exchanged for new cash. The move, seen as an attack on private market activity at the time, spurred a rush to hold hard currency.
It also quickened inflation and according to South Korea's spy agency, sparked rare civil unrest in one of the world's most entrenched authoritarian states after North Koreans realised the won was not a safe store of value.
The government is widely believed to have executed the economic official who oversaw the revaluation.
Dollars have circulated in North Korea for decades, partly because of the cash siphoned off from official foreign trade.
The rise in the use of yuan is a more recent phenomenon and reflects a surge in trade and smuggling between North Korea and China along their 1,400 km (875 mile) land border, where a lot of the currency changes hands. Official trade with China is worth $6bn annually.
Black market rates illustrate how far the won has fallen since the revaluation. It has plunged from $30 to one US dollar to about 8 500, according to exchange rates tracked by Daily NK. The current official exchange rate is about 130 won per dollar.
Daily NK has sources in North Korea who report every fortnight on rates in Hyesan, the city of Sinuiju opposite the Chinese border city of Dandong and also the capital Pyongyang.
In border areas some 90 percent of transactions occur in hard currency, said Christopher Green, Daily NK's manager of international affairs. Elsewhere, foreign cash accounts for 50 to 80 percent transactions in private markets, he estimated.
North Koreans increasingly did not refer to prices in won, Dong Yong-Sueng, senior fellow at the Samsung Economic Research Institute in Seoul, wrote in the April study on the use of foreign currency in the country.
Prices were marked in US dollars for beer, university preparation courses and apartments, Dong wrote.
South Korea's central bank estimated foreign currency in circulation at $1bn in 2000. Dong reckoned $2bn in foreign cash was now sloshing around the economy. Around half was in US dollars, 40% in yuan and 10% in euros, he told Reuters.
Dollars seeped into the market because trading firms exploited government quotas for exports and imports, making profits when prices diverged from those set by the state, Dong said.
It was not possible to estimate the amount of North Korean won in circulation, Dong added.
He said the North Korean informal economy was now bigger than the formal, state-led economy.
"Without foreign exchange, the economy would stop functioning," Dong said.
US officials have previously accused North Korea of making extremely high-quality counterfeit $100 notes. This money is believed to have been used to raise real cash for the regime abroad rather than get cycled into the economy.
"Juche" in name only
Despite purporting to follow an ideology of "juche", or self-reliance, Pyongyang did not have the will to stop the circulation of hard currency even if it had the means to do so, said Yang Moon-soo, an expert on the North's economy at the University of North Korean Studies in Seoul.
Ordinary North Koreans wanted yuan while the elite preferred dollars, said Yang, who has carried out a study on the use of both currencies based on interviews with North Korean defectors.
One official at a European embassy in Pyongyang, who has been visiting North Korea for more than a decade, said the most noticeable change had been the increased use of yuan. Most shops carried prices in dollars, yuan or euros, said the official.
"People ... pay in yuan at the market for rice and other daily necessities," said Ji Seong-ho, a defector living in South Korea who stays in touch with friends in the North.
An estimated 70% of defectors in South Korea also send cash back to family in North Korea, according to the Organization for One Korea, a South Korean support and research institute on North Korean defectors.
A Reuters report last year showed how this money was getting to North Korea via underground agents in China, mostly Chinese of Korean descent. They use ties on both sides of the border to funnel around $10m into the North each year, usually in yuan given the defectors send money to banks in China where it is collected by agents.
Use of the South Korean won is unheard of in North Korea. Even in the recently closed Kaesong industrial zone between the two Koreas, which employed 53 000 workers from the North, wages were made to a North Korean management committee in US dollars, not the South's legal tender.
There are small signs some in the North Korean government may be coming to grips with the hard currency reality.
In the Rason special economic zone in the far northeast of the country on the border with China, the government-run Golden Triangle Exchange Bank changes yuan into North Korean won.
The rate - according to people who visited the bank recently - was 1 200 won per yuan, or 7 350 won per dollar. That's a long way from the official rate of 130 won for one dollar. 

Australia's minimum wage rises

The minimum wage in Australia was raised 2.6% Monday, pushing the lowest weekly wage to AU$622 ($597)
The decision by The Fair Work Commission affects 1.5 million people and will take effect July 1.
It was half the increase unions wanted but three times higher than the level employers wanted.
Commission president Iain Ross said an expected increase in unemployment and a steady inflation rate led to the decision.
"If not addressed these trends may have broader implications both for our economy and for the maintenance of social cohesion in Australia," Ross said.
Australian Chamber of Commerce and Industry chief executive Peter Anderson called it a blow for small businesses.
"This is $1.5bn of increased wages that have to be funded by Australia's small and medium business community," Anderson told the Australian Broadcasting Corporation.

US shale poses challenge to Opec output

The Organisation of the Petroleum Exporting Countries' (Opec's) halcyon days of high prices and high production may be drawing to a close as soaring US output opens a new era for world oil markets.
After a comfortable ride since the 2008 price crash and record revenue of $1 trillion last year, it may have to be more proactive on output policy.
The rise of US shale oil and slack demand will eventually force Opec either to support oil at $100 a barrel by cutting output - offering higher price support to rival producers - or protect market share by keeping the taps open and allowing prices to fall.
Opec's Friday meeting was content to simply agree, as expected, to retain the group's 30 million barrels per day (bpd) output target for the rest of the year.
It will meet again on December 4. Ministers also agreed to set up a committee to investigate the impact of shale.
Oil is just above the $100 level favoured by the group that pumps a third of the world's oil. Opec's leading producer Saudi Arabia says the world oil market is in "good shape".
For now, maybe. But Opec has little room to pump more due to the US oil boom that has shifted the existing competition for marketshare once and for all to Asia, and intensified a rivalry between Opec's top two producers Saudi Arabia and Iraq there.
Core Gulf producers think Opec will still be able to pump at least 30 million bpd, provided US shale grows at a moderate pace. While that does not leave much room for growth, it implies that Opec will not need to scale back significantly.
"This is not the first time new sources of oil are discovered, don't forget history," said the influential Saudi Oil Minister Ali al-Naimi. "There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?"
There has not been such a surge in flows from outside Opec in decades and that has rung the alarm with some members - particularly Nigeria and Algeria - that feel squeezed.
"The rapid ramp up in US shale bears a striking resemblance to the situation in the early 1980s when North Sea oil production from the UK and Norway was rising very quickly," said Neil Atkinson, director of energy research at Datamonitor.
"This presented Opec with an enormous challenge because at the time demand growth was very weak. Nobody's saying that will happen again, but all the ingredients in that brew are starting to come into place."
Oil above $100 has freed vast quantities of US shale oil in North Dakota and Texas that helped boost US output by 850 000 bpd by the end of 2012.
That is more than each of Opec's two smallest producers, Qatar and Ecuador, pump in total. Light, low sulphur shale poses no threat to Opec's Gulf members that sell heavier crude - but is a headache for Nigeria and Algeria, which produce oil of similar quality.
The surge may even push the United States closer to the Saudi mindset, thinking more like a producer than a consumer keen to keep oil cheap.
Levels of price pain
Last year's surge in US output came with a hefty price tag as the rush to produce drove the cost of pumping marginal crude to $114 a barrel, according to a Bernstein Research report.
While Riyadh welcomes the rise of US shale, the Saudi oil minister himself has said the kingdom would be lucky to go beyond current production rates of about 9 million bpd by 2020 due to new global supplies.
But during that period, Iraq's production will have doubled from current rates of around 3 million bpd, if all goes to plan - a concern for Riyadh.
At some stage, Saudi Arabia may decide to open the taps to shut in the marginal barrel and make Iraq feel some pain, said analysts. The kingdom has done this before - early last decade it let the price fall to punish non-Opec producers. There are no signs of that now.
Oil at $70-$80 could start to impact the economics of some shale oil plays. Iraq's breakeven budget price is well above $100 a barrel.
With no pressure on its budget, analysts say Saudi Arabia could easily pump 8 million bpd at $80 without breaking sweat. After pumping 10 million bpd with oil at $110 last year and 9 million bpd with oil at $110 this year, it has built up formidable financial reserves.
Analysts' estimates for Saudi Arabia's break-even oil price this year vary from around $65 a barrel to $85, depending on projections for its spending.
"For Saudi Arabia, there's plenty of room on the downside in terms of price and quantity before they start to panic," said Yasser Elguindi of Medley Global Advisors.
"North Dakota will cut before anyone in Opec if oil falls to $70."
Others in Opec - including Iran, whose revenue has been sunk by Western sanctions directed against its nuclear programme, Iraq and Algeria - need oil well into triple digits to balance budgets.
This may lead them to call on Saudi Arabia to cut supply in order to support prices. But Riyadh may be thinking counter-intuitively.
"Saudi Arabia's challenge will be to convince Nigeria and Algeria that higher prices will encourage the economics (of US shale) that are their undoing," said Elguindi.
The group will choose its next secretary general when it meets again in December, said the Saudi oil minister. The issue has stalled on competing candidates from Iran, Iraq and Saudi Arabia.
Friday's meeting continued to adjust the criteria for prospective candidates to come forward.

Indian banks to get tough on defaulters

Fed up with a profitable textile company's failure to repay its loan, India's UCO Bank has taken its grievance public, placing newspaper ads last month that brand the industrialist owner of S Kumar's Nationwide Ltd a defaulter.
State Bank of India (SBI), Bank of India  and Bank of Baroda are also preparing to name and shame corporate borrowers which are not paying them back, bank executives told Reuters.
This aggressive tactic for dealing with bad debt marks a major departure from the traditional laid-back approach of Indian state lenders.
Weighed down by stressed loans of nearly $150bn equivalent to more than 10% of bank assets in the country and against a backdrop of the slowest economic growth in a decade, Indian banks are bringing an unprecedented intensity to their recovery efforts.
"We are going hammer and tongs to recover loans," said M S Raghavan, executive director at Bank of India, which last year began opening debt recovery branches to pursue defaulting borrowers.
In the banks' arsenal of debt recovery tools are the power to seize and sell assets, take deadbeat borrowers to court, sell loans to investors, and beef up debt recovery teams, although a slow-moving legal system and the lack of a bankruptcy process limit their effectiveness.
Officials at state banks, which account for about three-quarters of lending in India, expect the push will cut bad loan ratios by at least 1 percentage point.
Bank of India's non-performing loan (NPL) ratio improved slightly to 2.99% of total assets at end-March from 3.08% at end-December.
"If we don't intensify, nothing is going to come to us," Raghavan said.
Traditionally Indian lenders, especially those controlled by the government, have tried to nurse customers through tough times by easing terms or "evergreening" loans - giving new loans to pay old ones  an unlawful practice that many in the industry say is common.
In a country where businesses thrive on personal relationships, Indian banks have typically avoided involving the courts or liquidating assets - time-consuming efforts which often yield only minor results.
Even the so-called fast-track courts for banks, formed in the last decade, can take more than two years to resolve a case.
The central bank has called for better management of bad debts, and wants to strengthen oversight by lenders.
Indian banks tried to recover on $10.9bn in bad loans but managed just a quarter of that through liquidation and lawsuits in the year ended March 2012, the latest data from the central bank shows.
Banks are particularly needled by business chiefs who sit on huge personal fortunes, but whose companies fail to repay loans.
In March, Finance Minister P Chidambaram asked state banks to move against rich "promoters" to recover loans from failing companies after a $1.4bn default by Kingfisher Airlines, controlled by liquor baron Vijay Mallya.
Targets and texts
S Kumars and its Reid & Taylor clothing brand, well-known in India thanks to its endorsement by Bollywood superstar Amitabh Bachchan, owes $19m to UCO Bank, according to the Kolkata-based lender's newspaper ad.
Another lender, SBI, in May sent a liquidation notice to S Kumars and Reid & Taylor, said Soundara Kumar, head of the bank's stressed assets management division.
S. Kumars and Reid & Taylor founder Nitin Kasliwal did not respond to several phone calls from Reuters.
S Kumars earned net profit of 865m rupees ($15.47m) in the nine months to December, according to a stock exchange filing.
"What we are now beginning to see is incidents of such prosperous promoters and sick companies are increasing.
"What we have tried to do is simply send a message across," said a senior executive at UCO in Mumbai, speaking on condition of anonymity because they were not permitted to talk to the media.
There is some evidence that public outing as debt dodgers can goad a company into action.
United Bank of India took out a newspaper ad in April to say pharmaceutical packaging firm Bilcare's outstanding 515m rupees loan was in default. Bilcare later said in a stock exchange statement that it was in touch with lenders and was trying to restructure its loan.
Such methods are likely to become more popular, given the absence of a formal bankruptcy law, and the great time and cost of pursuing collection in court.
"Our legal systems move very slowly. We have such a huge number of pending cases in the courts that we are unable to lay our hands on assets that we can recover from," said Shubhalakshmi Panse, chairperson of state-run Allahabad Bank .
Bankers say errant borrowers often manage to get stay orders from various courts, slowing down the recovery process, and most cases take over two years to be resolved.
Panse said she has given daily loan recovery targets to bank officers and branch managers across India. They send her a text message each day apprising her of the status of those targets.
If borrowers want to stay out of court, they can try the Corporate Debt Restructuring (CDR) Cell, where banks sought to restructure a record $16.6bn in loans in the year that ended in March 2013, an increase of 38% year-on-year.
Worried that CDR enables both borrowers and banks to escape from bad loans too lightly, the central bank has asked lenders to set aside more money in reserve against restructured loans and begin classifying them as bad, starting in 2015.
In a rare case, lenders recently rejected a proposal by outsourcing firm Spanco to restructure a 13bn rupee loan through CDR.
Even the powerful Vijay Mallya could not hold Kingfisher's creditors at bay forever. After threatening to do so for months, banks began liquidating collateral for the airline's loans in March, more than a year after its initial default.
"Trying to be tough is a good step given that whatever they have been doing in the past has not been working," said Ismael Pili, banking analyst at Macquarie Securities in Hong Kong. ($1 = 55.9250 Indian rupees)