SEOUL- Communist North Korea has allowed private markets to reopen nationwide after a bungled currency revaluation worsened food shortages and fuelled anger at the regime, a Seoul welfare group said Thursday.

"All the markets across the country should be reopened - without exceptions - as before," Good Friends said in a newsletter, citing what it said was a special order from the central committee of the ruling Workers' Party.

It said security organisations across the nation were also ordered to launch "absolutely no crackdowns on trading in food" at the markets.

South Korea's intelligence agency said earlier this month the curbs on private markets had been eased in various places.

Good Friends, which has extensive contacts in the North, said the policy now applied across the country.

The official policy turnaround came last week, "based on assessments that the currency reform has caused enormous pain to people by paralysing distribution networks", group director Lee Seung-Yong told AFP.

"I believe North Korea will not clamp down on market activities for a considerable period, or at least until its state distribution system is back to normal."

The South's unification ministry, which handles cross-border relations, could not confirm the welfare group's report.

"We've heard the North gradually easing curbs on the markets but it is difficult to verify the full-scale reopening," said spokeswoman Lee Jong-Joo.

In recent years the regime imposed a series of curbs on market traders in an attempt to regain control over the economy, even though the official food rationing system was largely inoperative.

A currency revaluation announced on November 30, involving a 100-for-one swap of old won banknotes for new currency, was part of the crackdown on private traders.

But it sparked widespread anger by wiping out savings, sent prices soaring and worsened already serious food shortages, according to numerous reports.

Good Friends said this week that about 2,000 people had starved to death across the nation this winter.

Analysts told a parliamentary seminar in Seoul the currency chaos was a blow to the regime itself.

"The failure in North Korea's currency revaluation brought about severe damage to the endurance of the North Korean system," said Baek Seung-Joo, of the Korea Institute for Defense Analyses.

Baek said "the moral bond that connected the North Korean leader to the people has been weakened" following the failure.

Whether the North will be able to maintain its system "depends upon how North Koreans will change their political attitude", he said.

Park Young-Ho, of the Korea Institute for National Unification, said people's fatigue with the state system, the after-effect of the currency revaluation and information from the outside world "will weaken the effect of North Korean style of coercive rule".