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Korean Job Discussion Forums
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bangbayed
Joined: 01 Dec 2005
Location: Seoul
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 Posted: Fri Nov 21, 2008 10:40 pm Post subject: |
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I've gleaned a few reasons: The dollar is still considered the strongest currency amongst Asians, so many of them are buying it, keeping its price high. On the other hand, the Euro is considered strong in the US by many financiers, so many Americans are buying that.
In regards to why the won is so lower than the dollar even amongst Asian currencies, a Korean acquaintance told me that when 2MB took office, he purposefully kept the won devalued in order to keep exports high. When the economy dropped and exports didn't increase, the won kept falling, even in comparison to other Asian currencies. There haven't been a lot of repercussions to this yet, as I guess the Korean market does manage to sustain the economy to some degree, but next year might be a different story (layoffs, bankruptcies, etc.). |
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Jandar
Joined: 11 Jun 2008
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| Posted: Sat Nov 22, 2008 3:13 am Post subject: |
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| So long as others haven't figured it out I will continue with my present investment strategy. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Sat Nov 22, 2008 5:36 am Post subject: |
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| fiveeagles wrote: |
| mindmetoo wrote: |
People are handing their money over to the US treasury for 3 month tbills. There's a big demand on US dollars.
Look at it this way. You don't really have $4 billion. You have something that you think is or was worth $4 billion (stocks, bonds, etc.). You think that $4 billion is going to be worth $2 billion very soon (people's perception of the value of your stocks or bonds will quickly change). At this point, you don't care about a 5% return. You just want to keep your $4 billion. You can't put it in a bank because a bank might go bust. So you hand it to the US treasury and get 3 month bonds from them. The bonds pay .2% interest but you won't lose money and the USA will be the last nation on earth to go bankrupt. |
So why is the Euro and the pound so much more than the US dollar? |
Because the Euro and the pound are also hard, reserve currencies. People pursuing the strategy above are also pursuing it with other currencies. |
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suadente
Joined: 27 Sep 2004
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| Posted: Mon Nov 24, 2008 1:21 pm Post subject: |
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| bangbayed wrote: |
I've gleaned a few reasons: The dollar is still considered the strongest currency amongst Asians, so many of them are buying it, keeping its price high. On the other hand, the Euro is considered strong in the US by many financiers, so many Americans are buying that.
In regards to why the won is so lower than the dollar even amongst Asian currencies, a Korean acquaintance told me that when 2MB took office, he purposefully kept the won devalued in order to keep exports high. When the economy dropped and exports didn't increase, the won kept falling, even in comparison to other Asian currencies. There haven't been a lot of repercussions to this yet, as I guess the Korean market does manage to sustain the economy to some degree, but next year might be a different story (layoffs, bankruptcies, etc.). |
I heard it explained in a similar way. It's supply and demand. There still is demand for countries and companies to buy dollars. But, the economy has shrunk so there are less dollars out there to be bought. So, if a Korean company needs to to an exchange, it needs to sell Korean Won, and buy US dollars. But, since a lot of other companies also need dollars, they're willing to pay a higher price. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Mon Nov 24, 2008 8:56 pm Post subject: |
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It's not about the DEMAND for the dollar, it's about the SUPPLY of the dollar. So much of the money supply is imaginary, it's credit, only existing on paper and in computers. With the credit frozen and disappearing, the SUPPLY of dollars has contracted dramatically.
About a month ago, the Korean government released billions of dollars of US hard currency into the market to help deflate the dollar, but when you are talking about trillions of dollars, a few billion doesn't do much.
The dollar will weaken once the supply goes up or the demand drops. The economic turmoil fairly guarantees that the demand won't drop, so the supply must go up. Of course, the won could strengthen, but only if they restrict the supply, which would not be helpful to loosening worldwide credit or staving off full blown depression. |
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some waygug-in
Joined: 25 Jan 2003
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| Posted: Mon Nov 24, 2008 9:02 pm Post subject: |
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| VanIslander wrote: |
if you stab a mouse with a paring knife it could very well die
but
if you stab an elephant with the very same paring knife it'll at most bleed |
If you stab and elephant with a paring knife it'll most probably go into a sceaming rampage, flatten you, squeeze you into a spot of sludge on the pavement and probably do the same to onlookers and passers by.
What were you hoping to portray with your analogy? |
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