SEOUL -- North Korea redenominated its currency for the first time in 50 years and limited how much old money could be traded for new, likely wiping out millions of residents' savings and much of the cash used in market activities frowned upon by its authoritarian government.

The action triggered chaos in the isolated country on Monday and Tuesday, according to news outlets in South Korea that specialize in obtaining information from the North. Millions of people rushed to banks and offices of the ruling Workers Party to get information, make exchanges or trade existing North Korean won for euros and U.S. dollars.

North Korea has issued new currency four previous times since it was founded in 1948, most recently in 1992, usually at times of financial distress. But it has also used new currency issues as a political weapon, by limiting how much can be converted or distributing new notes unevenly, says Marcus Noland, a senior research fellow at the Peterson Institute for International Economics in Washington.

"It's basically a way of rewarding your friends and punishing your enemies," Mr. Noland says.