North Korea was holding foreign exchange reserves of between $3 billion and $6.6 billion in 2014, but that dipped heavily after the country came under strict US-led sanctions in 2017, the Bank of Korea said Tuesday in its latest report.

The report, which was largely based on estimations and assumptions because analysts lacked data from the isolated country, said the North’s holdings of US dollars may have sharply shrunk since the sanctions -- by an estimated $1 billion each year.

The North’s dollar holdings are presumed to have been on a decline between 2014-2016 already, at a slower pace of around $100 million a year. A large portion of the dollars are held by households, as the money is widely used in trade at the cash-strapped regime’s black markets, the report said.

The North seems to have managed to keep the exchange rate and consumer prices under control, despite the shrinking reserves and growing trade deficit, the report added, noting Pyongyang might see an economic crisis similar to the Asian financial crisis Seoul endured in 1997 if the regime faces a loss of dollar circulation.

“North Korea is a closed economy, so it would be uneasy for us to project the fallout in the event of the economic collapse,” the report said.

By Choi Si-young (siyoungchoi@heraldcorp.com)