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jackson7
Joined: 01 Aug 2006
Location: Kim Jong Il's Future Fireball
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 Posted: Mon Jan 21, 2008 7:01 pm Post subject: US Recession's direct ties to Won vs. Dollar |
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| Can anyone shed any light on this? I took a nice look at historical data of the won and dollar exchange, and didn't like the looks of things. When the US stock market was performing poorly, the exchange rate was poor (few dollars for lots of won), and vice-versa. Any long-timers or those with more market sense than I have that can enlighten me please? |
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Trevor
Joined: 16 Nov 2005
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| Posted: Mon Jan 21, 2008 7:49 pm Post subject: Re: US Recession's direct ties to Won vs. Dollar |
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The asian markets are also having a rotten time, lately. If the U.S. falls into recession and Asia follows, then the exchange rate is not going to look good.
If, however, there is a U.S. recession and Korea's economy gets stronger, you will very likely be happy to be holding Won.
Right now the exchange rate is down. Sit tight on your paycheck and wait for happier days.
| jackson7 wrote: |
| Can anyone shed any light on this? I took a nice look at historical data of the won and dollar exchange, and didn't like the looks of things. When the US stock market was performing poorly, the exchange rate was poor (few dollars for lots of won), and vice-versa. Any long-timers or those with more market sense than I have that can enlighten me please? |
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spamghod
Joined: 26 Dec 2007
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| Posted: Mon Jan 21, 2008 8:55 pm Post subject: |
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Right now the exchange rate is:
KRW-943.10= $1
The main reason the rates are so bad compared to 3 months ago (W910) is that the Yen carry trade has been affected. They were borrowing money cheap from Japan and trading with it in Korea. A lot of that money has been taken out to cover market losses. The dollar is strengthening short term, but long term it will drop again, the won will rise against it, but not as drastically. If you want to keep the money you've got, buy gold, silver or palladium coins.
I've been buying gold and silver since 2005, gold is a bit high now, so I'm concentrating more on silver and palladium. A good place to buy (if you're American) is apmex.com. |
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hari seldon
Joined: 05 Dec 2004
Location: Incheon
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| Posted: Mon Jan 21, 2008 9:05 pm Post subject: Re: US Recession's direct ties to Won vs. Dollar |
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| jackson7 wrote: |
| Can anyone shed any light on this? I took a nice look at historical data of the won and dollar exchange, and didn't like the looks of things. When the US stock market was performing poorly, the exchange rate was poor (few dollars for lots of won), and vice-versa. Any long-timers or those with more market sense than I have that can enlighten me please? |
You're an American and the dollar's taken a pounding against the won. What the hell are you worried about? |
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jackson7
Joined: 01 Aug 2006
Location: Kim Jong Il's Future Fireball
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| Posted: Tue Jan 22, 2008 12:05 am Post subject: |
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| I'm worried because I can buy fewer dollars these days for the same amount of won I earn here. I have to send money to the states each month to pay for student loan debt and mortgage (thankfully I have 3 months of savings there, but it should be 12) payments. I have a long-term financial plan that would be hurt if the won to dollar went above 1000. (I didn't use rise or fall, because we've had many debates as to how these words are interpreted in currency exchange. 'Strengthen' and 'weaken' are better terms, I think.) |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Tue Jan 22, 2008 12:20 am Post subject: Re: US Recession's direct ties to Won vs. Dollar |
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| jackson7 wrote: |
| Any long-timers or those with more market sense than I have that can enlighten me please? |
1) When the US sneezes, the world catches a cold.
World markets are heavily dependent on the US's well being. When the US economy goes down, economies around the world take even a bigger hit. Especially developing markets and those who rely heavily on exports to the US, such as Korea's.
2) Flight to safety
When the going gets bad, investors move their money out of high risk markets (such as China and Korea) and into safe havens. Such as US treasuries. Thus on a day like today, you'll see the US dollar gaining strength and US treasuries rally like crazy.
These two things combine to create less demand for things like the Korean Won and Canadian dollar, and more demand for US dollars. |
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victorology
Joined: 10 Sep 2007
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| Posted: Tue Jan 22, 2008 12:53 am Post subject: Re: US Recession's direct ties to Won vs. Dollar |
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| huffdaddy wrote: |
2) Flight to safety
When the going gets bad, investors move their money out of high risk markets (such as China and Korea) and into safe havens. Such as US treasuries. Thus on a day like today, you'll see the US dollar gaining strength and US treasuries rally like crazy.
These two things combine to create less demand for things like the Korean Won and Canadian dollar, and more demand for US dollars. |
This is the main thing we've been seeing in recent days. The stock markets around the World and particularly Asia have taken a beating. When foreigners sell Korean stocks, they take their money out. It gets converted to dollars (or whatever currency) and the value of the won drops. |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Tue Jan 22, 2008 3:04 am Post subject: Re: US Recession's direct ties to Won vs. Dollar |
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Don't worry about it. The long-term trend is for a weaker dollar, and that trend will be aided by interest rate cuts in the US, as the government desperately tries to stimulate the economy in an election year.
The US is the largest economy, but independence is increasing. China recently replaced the US as Korean largest export destination, for example. Of course, it doesn't help Korea that China is having its own bubble.
Here is the 2007 monthly picture of how many won you needed to buy a dollar. It doesn't show a long-term strengthening of the dollar:
http://www.x-rates.com/d/KRW/USD/hist2007.html |
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hari seldon
Joined: 05 Dec 2004
Location: Incheon
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| Posted: Tue Jan 22, 2008 3:32 am Post subject: |
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| jackson7 wrote: |
| I'm worried because I can buy fewer dollars these days for the same amount of won I earn here... |
Huh? That doesn't make any sense. The dollar is weak and there's nothing to indicate it'll significantly strengthen any time soon. Look at the American economy. The Federal Reserve chairman is predicting recession and calling for a stimulus. |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Tue Jan 22, 2008 3:46 am Post subject: |
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| hari seldon wrote: |
| jackson7 wrote: |
| I'm worried because I can buy fewer dollars these days for the same amount of won I earn here... |
Huh? That doesn't make any sense. The dollar is weak and there's nothing to indicate it'll significantly strengthen any time soon. Look at the American economy. The Federal Reserve chairman is predicting recession and calling for a stimulus. |
He must be talking about the trend over the last three months. Other than that, yes, it makes no sense. |
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kingplaya4
Joined: 14 May 2006
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| Posted: Tue Jan 22, 2008 5:11 am Post subject: |
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| hari seldon wrote: |
| jackson7 wrote: |
| I'm worried because I can buy fewer dollars these days for the same amount of won I earn here... |
Huh? That doesn't make any sense. The dollar is weak and there's nothing to indicate it'll significantly strengthen any time soon. Look at the American economy. The Federal Reserve chairman is predicting recession and calling for a stimulus. |
You're not American so you're not making any sense at all. Who cares that the dollar was weak vs the won months ago? Despite all the dollars weakening, the exchange is now back to less than it was when I first got year (albeit slightly).
The fact that the Euro has made a 50% gain vs the dollar doesn't help the won at all. I don't understand all the economics of it, but clearly the won seems to do best when the US economy is doing so-so. When its doing really badly, it hurts the Koreans stock market, which hurts the won. |
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Trevor
Joined: 16 Nov 2005
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| Posted: Tue Jan 22, 2008 5:20 am Post subject: |
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The fed just cut the interest rate by .75 between meetings. That's almost unprecedented. Not going to have a good effect on the exchange rate in the short term.
| kingplaya4 wrote: |
| hari seldon wrote: |
| jackson7 wrote: |
| I'm worried because I can buy fewer dollars these days for the same amount of won I earn here... |
Huh? That doesn't make any sense. The dollar is weak and there's nothing to indicate it'll significantly strengthen any time soon. Look at the American economy. The Federal Reserve chairman is predicting recession and calling for a stimulus. |
You're not American so you're not making any sense at all. Who cares that the dollar was weak vs the won months ago? Despite all the dollars weakening, the exchange is now back to less than it was when I first got year (albeit slightly).
The fact that the Euro has made a 50% gain vs the dollar doesn't help the won at all. I don't understand all the economics of it, but clearly the won seems to do best when the US economy is doing so-so. When its doing really badly, it hurts the Koreans stock market, which hurts the won. |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Tue Jan 22, 2008 5:40 am Post subject: |
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| kingplaya4 wrote: |
| hari seldon wrote: |
| jackson7 wrote: |
| I'm worried because I can buy fewer dollars these days for the same amount of won I earn here... |
Huh? That doesn't make any sense. The dollar is weak and there's nothing to indicate it'll significantly strengthen any time soon. Look at the American economy. The Federal Reserve chairman is predicting recession and calling for a stimulus. |
You're not American so you're not making any sense at all. Who cares that the dollar was weak vs the won months ago? Despite all the dollars weakening, the exchange is now back to less than it was when I first got year (albeit slightly).
The fact that the Euro has made a 50% gain vs the dollar doesn't help the won at all. I don't understand all the economics of it, but clearly the won seems to do best when the US economy is doing so-so. When its doing really badly, it hurts the Koreans stock market, which hurts the won. |
Buddy, dollars are cheaper now for those who live and work in Korea. Is that a difficult concept for you to grasp? That's what the OP was asking about.
Spare us your economic philosophy, please. I teach one-on-one classes with some of Asia's financial superstars. They are regularly in Forbes magazine and all over Korean TV.
You're not. |
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50 Won
Joined: 14 Jan 2007
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| Posted: Tue Jan 22, 2008 7:14 am Post subject: |
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| This is a moronic post. There is no correlation between the U.S. market and the foreign exchange market, period! Why?? Because foreign exchange is SPECULATION. The Dow's performance has ramifications on global stock markets, but when it comest of FX, it is a seperate, distinct entity. |
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victorology
Joined: 10 Sep 2007
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| Posted: Tue Jan 22, 2008 8:20 am Post subject: |
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| Trevor wrote: |
| The fed just cut the interest rate by .75 between meetings. That's almost unprecedented. Not going to have a good effect on the exchange rate in the short term. |
Cutting interest rates have a positive effect on the exchange rate (if you want a strong won) in the short term. The won is currently up in today's trading to 947.3. When interest rates fall, currency traders will move out of the dollar and into currencies with governments that pay higher interest rates on government bonds. |
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