Korean Job Discussion Forums

[htrain]

I've been trading currencies for a few years now and options for about a year and I started thinking. If we could buy put options on Korean won, it could be a really good insurance policy. Personally, my pain threshold for the won is about 1100. If we could buy puts with a strike price of 1100 it would mean any rise above that we could make up the cash on the other end.

If say we plan on making 40 mil for the year, we could buy 40 mil won worth of put options at a strike of 1100. The problem is that Korean won is not a publicly traded currency. I wonder if there are measures in place to protect against speculation after the IMF crisis.

I did check and the Chicago futures exchange trades won options but from what I've read it is only for large-scale institutional investors. Does anybody here trade won futures? If I could buy say June 09 puts I would feel much better about staying here for another year and hedge against this b.s. fluctuation we're getting.

[pkang0202]

Its general consensus that the WON is going to rebound and increase within a year or 2. The question is, how far will it go down before it starts to go back up?

[htrain]

[htrain]

Articles like this don't make me feel like the consensus is optimistic:

Currency dealers delayed selling dollar holdings on speculation that the won's losing streak would continue. The won has fallen for the 12th consecutive session, losing 92.7 won against the greenback.

Dealers said the won is expected to be under pressure down the road, reflecting a falling trade surplus and concerns about an economic slowdown. Korean firms are also scheduled to make dividend payments to foreign investors in March and April, which will supply more won to the market.

The Bank of Korea raised concerns about the won's steep fall, Monday, saying it is ``closely watching the market.'' The comments raised speculation that the central bank has begun to intervene in the market to prevent further falls of the local currency. But the Ministry of Strategy and Finance has not issued any statements. Strategy and Finance Minister Kang Man-soo has hinted the government is ready to tolerate inflation and a trade deficit to realize 6 percent growth this year.

The won's fall will put upward pressure on consumer prices.

``A weaker won can provide a setback to the economy amid rising international prices of raw materials and growing inflation here,'' said Kwon Soon-woo, an economist at Samsung Economic Research Institute. ``External risks may pull growth rates down and increase volatility on the financial market.''

http://www.koreatimes.co.kr/www/news/biz/2008/03/123_20871.html

[huffdaddy]