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Omkara
Joined: 18 Feb 2006
Location: USA
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 Posted: Tue Mar 03, 2009 8:36 pm Post subject: |
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| But then, on a national scale, what does such a seemingly minor adjustment to the exchange rate add up to? |
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cedarseoul
Joined: 16 Feb 2008
Location: nowon-gu
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| Posted: Tue Mar 03, 2009 9:58 pm Post subject: |
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| JFuller317 wrote: |
| Some intervention. So instead of yesterday's 1575 on xe, right now we have 1557. I wonder how many billions it took to get a whopping 18 point reduction in the rate. |
$700-800mil, it would seem (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aF8pwphOnZTI).
But you shouldn't look only at the won's rise; you should consider its potential loss. Short of that intervention, the won most likely would have broached 1600 yesterday or today.
Government intervention in and of itself isn't going to turn the local currency around - but it's a sharp caution for investors who are betting solely against the won. Improving investor sentiment (demonstrating that the won isn't in unchecked freefall and reminding them that Korea's fundamentals are relatively strong) will be key to stabilizing the market. |
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poet13
Joined: 22 Jan 2006
Location: Just over there....throwing lemons.
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| Posted: Tue Mar 03, 2009 9:58 pm Post subject: |
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1535 at Kb.
On a national scale, the last 24 hours swing is about 4%. That's pretty whack for a major currency. I like it though.... |
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JFuller317
Joined: 10 Oct 2008
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| Posted: Tue Mar 03, 2009 10:23 pm Post subject: |
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I don't even care about 1100 anymore. Just give me <1450 and I'll send home millions.
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| Government intervention in and of itself isn't going to turn the local currency around - but it's a sharp caution for investors who are betting solely against the won. |
I just hope that someday, someone out there loses millions of dollars by betting solely against the won and ends up killing himself. That would almost make this misery worth it. |
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Yu_Bum_suk
Joined: 25 Dec 2004
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| Posted: Tue Mar 03, 2009 10:40 pm Post subject: |
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| Omkara wrote: |
| But then, on a national scale, what does such a seemingly minor adjustment to the exchange rate add up to? |
On the world market, a short-lived rise that ends when speculators think it's peaked. Until there's a genuine belief that for whatever reason people will be motivated to start buying more won, it's a trend that's very hard to reverse. A government programme to clear the way for more, easier, FDI would do more than anything, but that's where national pride still seems to trump national pocketbook at the moment. |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Tue Mar 03, 2009 11:11 pm Post subject: |
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| Yu_Bum_suk wrote: |
| Omkara wrote: |
| But then, on a national scale, what does such a seemingly minor adjustment to the exchange rate add up to? |
On the world market, a short-lived rise that ends when speculators think it's peaked. Until there's a genuine belief that for whatever reason people will be motivated to start buying more won, it's a trend that's very hard to reverse. A government programme to clear the way for more, easier, FDI would do more than anything, but that's where national pride still seems to trump national pocketbook at the moment. |
I don't expect the currency to get any better in the short-run. It could go to 1650 by April. That's why I've cut back on my spending. I hardly eat out now except on weekends. I am sending money back home as soon as I get a paycheck. I know some want to hold on to their money. However, why risk it. The US economy is somewhat shaky, and Korea likes their currency low, so they can export. Those who want to send their children abroad may have some problems, though. |
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Robot_Teacher
Joined: 18 Feb 2009
Location: Robotting Around the World
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| Posted: Tue Mar 03, 2009 11:19 pm Post subject: |
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It computes in this robots CEO based finance enumerating CPU that we're losing substantial amounts of money with being paid in green man won notes instead of US dollars; possibly being off by 50% inside 1 year. According to the history of the Won in the history of the world, 950 to 1000 per US dollar is standard par for the course, but something unexplainable happened last October and it still stands uncorrected. They also say the US dollar is gaining strength which is unexplainable as the US economy is tanking out upside down wrong side up.
Where is my 1000 won to the dollar my recruiter promised?
My 1 million won is no longer worth $1000 as expected, but a paltry $640 at 1551 won to the US dollar. At the bank, it's probably more like 1590 to the dollar in reality making my 1 milion won worth only about $625.
Where is my escape from bad macro economics? |
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Yu_Bum_suk
Joined: 25 Dec 2004
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| Posted: Tue Mar 03, 2009 11:25 pm Post subject: |
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| Robot_Teacher wrote: |
It computes in this robots CEO based finance enumerating CPU that we're losing substantial amounts of money with being paid in green man won notes instead of US dollars; possibly being off by 50% inside 1 year. According to the history of the Won in the history of the world, 950 to 1000 per US dollar is standard par for the course, but something unexplainable happened last October and it still stands uncorrected. They also say the US dollar is gaining strength which is unexplainable as the US economy is tanking out upside down wrong side up.
Where is my 1000 won to the dollar my recruiter promised?
My 1 million won is no longer worth $1000 as expected, but a paltry $640 at 1551 won to the US dollar. At the bank, it's probably more like 1590 to the dollar in reality making my 1 milion won worth only about $625.
Where is my escape from bad macro economics? |
It's not that hard to explain: in a global financial crisis there's an increased demand for the world's largest currency.
You're escape would have been to find a job in a country with a more stable currency, like say one on the other side of the 동해, but it's a bit late now that you've bet on the wrong horse.
That a country with such a cheap currency is still doing just as badly or worse as other industrialised countries when it comes to exports is a bit scary, though. |
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poet13
Joined: 22 Jan 2006
Location: Just over there....throwing lemons.
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| Posted: Wed Mar 04, 2009 1:01 am Post subject: |
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Once again, the only way you are losing money is if you exchange it. 2.5 million won today is the same 2.5 million won it was last summer. It buys a little less because the price of a lot of imported goods have gone up and there's been some inflation, but essentially, if you buy local, you're purchasing power is nearly the same as last year.
I think a lot of people are being shortsighted. Look at the bigger picture. I believe that eventually, this will pass. I believe the Won will recover to something we can all appreciate. But it will take time. Those dollars you're buying are crazy expensive.
Think about this. For the doomsayers who predict that the new parity is 1600 or 2000 won to the dollar; is it really logical that in a very few months, that the worlds 14th (WB) largest economy by GDP lost nearly half its value, and that that is permanent?
Ok, my economics are super sketch on that, but what I'm saying is that I cannot believe that this currency devaluation is permanent. |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Wed Mar 04, 2009 2:20 am Post subject: |
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| poet13 wrote: |
Once again, the only way you are losing money is if you exchange it. 2.5 million won today is the same 2.5 million won it was last summer. It buys a little less because the price of a lot of imported goods have gone up and there's been some inflation, but essentially, if you buy local, you're purchasing power is nearly the same as last year.
I think a lot of people are being shortsighted. Look at the bigger picture. I believe that eventually, this will pass. I believe the Won will recover to something we can all appreciate. But it will take time. Those dollars you're buying are crazy expensive.
Think about this. For the doomsayers who predict that the new parity is 1600 or 2000 won to the dollar; is it really logical that in a very few months, that the worlds 14th (WB) largest economy by GDP lost nearly half its value, and that that is permanent?
Ok, my economics are super sketch on that, but what I'm saying is that I cannot believe that this currency devaluation is permanent. |
Poet, many of us here are not here for another 2 more years. You seem to have that window. If you are here for less than a year, then you can't really expect a better rate by the summer. Some say, it may head down to 1800 for a dollar. If you will be here in 2010 then you can have the luxury of holding on to your money or if you have lots of reserves in dollars, but that doesn't apply to most here. They have to pay debts. |
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poet13
Joined: 22 Jan 2006
Location: Just over there....throwing lemons.
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| Posted: Wed Mar 04, 2009 3:18 am Post subject: |
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"Poet, many of us here are not here for another 2 more years. You seem to have that window. If you are here for less than a year, then you can't really expect a better rate by the summer. Some say, it may head down to 1800 for a dollar. If you will be here in 2010 then you can have the luxury of holding on to your money"
Yes, I realize that a lot of people are not here for two more years. But I also hear long-termers, and even lifers panicking. I suppose it's them who I should be addressing.
Yes, I do have that window. I also agree that we can't expect a much better rate by summer. 1800...? Hmm, that's a tough call. Personally I don't think so....but I'm also no one to call that.
2010....well, I think that in Korea, a single person can save (a buttload of) money wherever they live. I also know that they can create an account that can be accessed from another country...ie; get their money. They won't "make" money, as in profit, but in a couple of years, they can at least get near what they signed up for. |
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Adventurer
Joined: 28 Jan 2006
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| Posted: Wed Mar 04, 2009 6:20 am Post subject: |
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| poet13 wrote: |
"Poet, many of us here are not here for another 2 more years. You seem to have that window. If you are here for less than a year, then you can't really expect a better rate by the summer. Some say, it may head down to 1800 for a dollar. If you will be here in 2010 then you can have the luxury of holding on to your money"
Yes, I realize that a lot of people are not here for two more years. But I also hear long-termers, and even lifers panicking. I suppose it's them who I should be addressing.
Yes, I do have that window. I also agree that we can't expect a much better rate by summer. 1800...? Hmm, that's a tough call. Personally I don't think so....but I'm also no one to call that.
2010....well, I think that in Korea, a single person can save (a buttload of) money wherever they live. I also know that they can create an account that can be accessed from another country...ie; get their money. They won't "make" money, as in profit, but in a couple of years, they can at least get near what they signed up for. |
Well, if a person who wants to be hear long-term is panicking, it may be partially because they still have bills to pay. The banks won't wait 2 years until the exchange rate goes up i.e. the student loan people.
If I had saved tons of money, then I would not mind sitting some millions of won and exchanging it during a rainy day. Some economists are expecting the won to be at 2000 to $1. I am not so sure, but I can imagine it going to 1650-1700 by May. Supposedly, Korea has a major problem - it has huge debt, and much of it is maturing and Korea barely has the foreign reserves to cover that. The won has weak foundations, obviously. Of course, over the long-term, it should go back to 1,200.
I think if you have no bills at home, you have savings, and you plan on being here for a couple of years, then ride out the storm. For many of us, that's not an option. |
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nene
Joined: 11 Jun 2005
Location: Samcheok, Gangwon-do
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| Posted: Wed Mar 04, 2009 2:37 pm Post subject: |
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| What kind of debt are you folks financing? I have a large monthly payment I have to cover, am in a public school job w/o privates, and I make more than enough to make payments, take vacations and save extra. The collapse of the won sucks, but it's still not bad for us here. Just not incredibly easy like it was a couple years ago. |
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marlow
Joined: 06 Feb 2005
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| Posted: Wed Mar 04, 2009 5:04 pm Post subject: |
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| Adventurer wrote: |
| I think if you have no bills at home, you have savings, and you plan on being here for a couple of years, then ride out the storm. For many of us, that's not an option. |
Yeah. I think that those coming for a year at present are getting the shit end of the stick. |
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marlow
Joined: 06 Feb 2005
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| Posted: Fri Mar 06, 2009 5:16 pm Post subject: |
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http://media.economist.com/images/20090228/CFN035.gif
http://www.economist.com/finance/displaystory.cfm?story_id=13184631
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| In contrast, the Asian emerging markets generally look the safest, taking all six slots at the bottom of the table. The main exception is South Korea, which, thanks to its large short-term foreign debts and highly leveraged banks, is deemed to be as risky as Poland. (Vietnam, though not included in the table, also scores high on the risk rating). South Korea is in much healthier shape than during the 1997-98 crisis. For example, it is expected to move back to a small current-account surplus this year and its reserves are much larger. But its banks and its currency still look vulnerable. The won has already fallen by almost 40% against the dollar over the past year, swelling the local-currency value of its foreign debts. Increased financial jitters in east Europe could make it harder for South Korea to roll over the $194 billion debt which falls due this year. But currency-swap agreements with America, Japan and China will give it plenty of firepower to draw on. |
Interesting article and chart linked above. The quote is from there. I think the chart accurately describes why the won is so shitty. |
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