Korean Job Discussion Forums

[mack4289]

A lot of news has been in the JA Daily lately about the strengthening won and its effect on Korean exporters. Not much has showed up about the benefits of a strengthened won- more purchasing power for Koreans and therefore a more attactive consumer market. This increased purchasing power and strengthened domestic consumer base would also help insulate Korea against financial shocks from overseas. But that's nowhere to be found in articles like this:

http://joongangdaily.joins.com/article/view.asp?aid=2877831

"Industry voices are urging the monetary authority to leave interest rates unchanged when the Monetary Policy Committee meeting at the Bank of Korea meets Thursday. Policies aimed at controlling liquidity, including interest rate changes, will be decided at the session.

Lee Hee-beom, chairman of the Korea International Trade Association said, �With the current currency exchange rate, where the Korean won is overvalued, exporters are reaching their limits in making profit.�
He demanded a policy that weakens the won and stabilizes the currency market.

... It becomes a vicious circle. More exports result in more appreciation of the won,� Lee said.
�The Japanese yen is a good model for the policymakers to refer to,� he said, citing its stability and relatively low value."

Yes, Japan. Artificially cheap currency couldn't have any drawbacks, could it?

http://www.iht.com/articles/2007/07/02/business/bxatm.php

"Several top Japanese manufacturers say they are concerned that the yen's slump to a 22-year low is too much of a good thing for Japanese exporters.

Nissan Motor, the third-biggest carmaker behind Toyota and Honda in Japan, cannot afford to rely on exchange rates to compete, its chief executive, Carlos Ghosn, said. The Canon chairman, Fujio Mitarai, head of the largest business lobby in the country, and Masamitsu Sakurai, the Ricoh president, leader of the biggest executive group, said the yen's drop was becoming a concern.

While the yen's 10 percent decline against the dollar and 20 percent plunge versus the euro in the past two years helped the companies post record earnings, it has also pushed up import costs that may cut into profit and sparked criticism from trading partners.

"Honestly, the yen is too cheap," said Michijiro Kikawa, chief executive of Hitachi Construction Machinery, which sells mining equipment. "There will be trade friction should the yen fall further."

..... The yen's drop increases import costs for exporters and consumers. Japan relies on imports for almost all of its energy needs.

"There's always a fundamental concern about prolonged, excessive yen undervaluation," said Toyoo Gyohten, the top currency official at the Ministry of Finance from 1986 to 1989 and president of the Institute of International Monetary Affairs in Tokyo. "The economy would be too dependant on external demand and trade friction is a potential risk."

A push for a cheap currency, a lack of concern for developing the strength of the domestic consumer market, and an undeveloped bond market (see below)? Maybe one of the sharper economic minds on here can put together the pieces. I'm guessing it isn't good.

http://www.iht.com/articles/2005/11/13/bloomberg/sxpesek.php#

"As Wall Street luminaries funnel into Hong Kong this week, one thing will be made clear: Asia's debt markets are getting ready to take on the world.

.... A former deputy finance minister of Japan, Kuroda knows all too well how the dearth of dynamic debt markets holds back Asia.

Their absence has led the region to channel more than $1 trillion into U.S. Treasuries. Healthy bond markets might keep that money at home, to reduce interest rates and fund education, infrastructure, or research and development. Asian companies also are too reliant on banks for loans, forcing them to pay higher interest.

.... The region's recovery from financial crisis is still a work in progress, and has shown that underdeveloped bond markets leave economies hypersensitive to interest rate moves, credit crunches and currency volatility.

Now that economic growth has returned, efforts to foster debt markets have become less urgent. Yes, governments have worked to create entire yield curves of securities, with maturities ranging from three months to 20 years. Varying degrees of progress have been made toward building networks of dealers that bid on government bonds, like the one that exists in the United States. Development of corporate markets has been far less substantial.

Asia is the new frontier of capitalism, boasting rapid growth, swelling populations, undervalued stocks and droves of companies that have yet to issue debt. It is no wonder that bond firms are clamoring for a piece of the pie.

.... Obstacles to deeper markets in Asia are many. They include the small size of public markets that can be used as benchmarks for pricing debt, and a reluctance to follow international accounting standards. Corruption and unreliable regulation do not help. Neither does a legacy of restraints on capital flows.

All this is a major blemish on Asia's postcrisis report card. While the region has booming economies, the absence of a liquid bond market that can absorb financial shocks and disruptions is a weakness. A smoothly functioning bond market can serve as a refuge for investors bailing out of stocks. As Asian shares fell in the late 1990s, investors had no other quality assets to buy, and so they fled.

The immediate beneficiaries would be small and midsize enterprises that now go begging for capital. Banks are often preoccupied with larger, more established businesses, not upstart companies that create new jobs and revitalize economies. Entire populations may get a boost if companies have more efficient ways to fund future growth and, eventually, pay higher wages.

Thanks to tools like "How to Buy a Corporate Bond," Asian debt may appear less foreign to many investors. Rising demand for private debt will encourage new issuance and create opportunities for economic growth.

It's a rare win-win for both the world's premier bond houses and for Asian households just scraping by."

[mrsquirrel]

It's not strengthening against the Pound or the Baht which is killing my earnings now.