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philipswoodjnr
Joined: 03 Oct 2011
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 Posted: Wed Oct 05, 2011 6:16 pm Post subject: |
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| Only going to get worse ...... |
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spacechase
Joined: 21 Nov 2009
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| Posted: Wed Oct 05, 2011 9:19 pm Post subject: |
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According to [http://www.x-rates.com/d/KRW/USD/graph120.html], the XR crept down a tiny bit today, to 1189 per dollar.
But I went into KB Bank today to exchange a bit (before it gets any worse), and they were trading for 1206.
I'm new to this XR business, but can banks do that?
Do all different banks set their own exchange rates slightly above the average?
I'm guessing that's the rate my money was traded at, not 1189.
Also, anyone know if it's possible to monitor KB's exchange rates online? Can't find it. |
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rainism
Joined: 13 Apr 2011
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| Posted: Wed Oct 05, 2011 9:55 pm Post subject: |
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| spacechase wrote: |
According to [http://www.x-rates.com/d/KRW/USD/graph120.html], the XR crept down a tiny bit today, to 1189 per dollar.
But I went into KB Bank today to exchange a bit (before it gets any worse), and they were trading for 1206.
I'm new to this XR business, but can banks do that?
Do all different banks set their own exchange rates slightly above the average?
I'm guessing that's the rate my money was traded at, not 1189.
Also, anyone know if it's possible to monitor KB's exchange rates online? Can't find it. |
1189 is merely the last traded price or the settlement price depending on when you checked.
Even in the FX marketplace there is not one price for the Korean won (or any other currency). There is the bid price and the ask price.. you can buy the ask price or sell the bid price, but in the FX marketplace this difference between bid and ask is tiny.
on the retail level, it becomes much much wider. Welcome to banking 101.
the Bank will quote you a bid price and and offer price around something like 1.5% ( at either .985 or 1.015 if something were trading at "1".)
at Incheon airport, it's 2% either way.
That's how the bank makes money and wants to change your money.
you can always go to keb.co.kr and check the quoted FX prices there without having to log in. You'll notice the wire price is a little better than cash price. |
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losthooper
Joined: 25 Aug 2011
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| Posted: Wed Oct 05, 2011 10:10 pm Post subject: |
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What's your advice for a teacher coming in a few weeks? Since I get a favorable exchange rate (1 dollar to 1,200 KRW) at first thought it seems I should benefit from an exchange but are the prices of goods in Korea going up right now (i.e. inflation) due to the weakening of the won?
Obviously if I exchange a lot of cash and the ratio worsens (reasonable to expect) I'd come home with less at the end of my contract. |
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rainism
Joined: 13 Apr 2011
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| Posted: Wed Oct 05, 2011 11:34 pm Post subject: |
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| losthooper wrote: |
What's your advice for a teacher coming in a few weeks? Since I get a favorable exchange rate (1 dollar to 1,200 KRW) at first thought it seems I should benefit from an exchange but are the prices of goods in Korea going up right now (i.e. inflation) due to the weakening of the won?
Obviously if I exchange a lot of cash and the ratio worsens (reasonable to expect) I'd come home with less at the end of my contract. |
have a little USD stash handy if possible, so if the won tanks, you can spend USD and not spend won till it hopefully crawls back one day.
yes, Korean inflation is very high for an industrialized country, it's one of the highest if not the highest in the OECD and I think they understate official stats.
You'll figure it out soon the moment you see Korean prices. Don't buy anything in Korea unless you have to.
Stock market (US market) has been up 6% over the last 2 days. and Korean stocks were up almost 4% today, but the won rate has barely improved.
that suggests to me, no shorts are getting out and certainly no one wants to buy the crappy piece of _____.
When stocks tank again, the Korean govt won't have enough money to defend 1200. They won't be that stupid. |
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losthooper
Joined: 25 Aug 2011
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| Posted: Thu Oct 06, 2011 12:17 am Post subject: |
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| rainism wrote: |
| losthooper wrote: |
What's your advice for a teacher coming in a few weeks? Since I get a favorable exchange rate (1 dollar to 1,200 KRW) at first thought it seems I should benefit from an exchange but are the prices of goods in Korea going up right now (i.e. inflation) due to the weakening of the won?
Obviously if I exchange a lot of cash and the ratio worsens (reasonable to expect) I'd come home with less at the end of my contract. |
have a little USD stash handy if possible, so if the won tanks, you can spend USD and not spend won till it hopefully crawls back one day.
yes, Korean inflation is very high for an industrialized country, it's one of the highest if not the highest in the OECD and I think they understate official stats.
You'll figure it out soon the moment you see Korean prices. Don't buy anything in Korea unless you have to.
Stock market (US market) has been up 6% over the last 2 days. and Korean stocks were up almost 4% today, but the won rate has barely improved.
that suggests to me, no shorts are getting out and certainly no one wants to buy the crappy piece of _____.
When stocks tank again, the Korean govt won't have enough money to defend 1200. They won't be that stupid. |
Agreed, sound analysis.
Sound logic regarding holding dollars too. It'll likely reach 1300 in the next few months and even 1500 within the next 6 months, exchanging 1000 USD for 1,500,000 KRW would feel pretty good assuming inflation hasn't gone nuts.
Then if I catch it anywhere near 1000 KRW=1 USD when I finish my contract I'll be good to go! |
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rainism
Joined: 13 Apr 2011
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| Posted: Thu Oct 06, 2011 12:21 am Post subject: |
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| losthooper wrote: |
| rainism wrote: |
| losthooper wrote: |
What's your advice for a teacher coming in a few weeks? Since I get a favorable exchange rate (1 dollar to 1,200 KRW) at first thought it seems I should benefit from an exchange but are the prices of goods in Korea going up right now (i.e. inflation) due to the weakening of the won?
Obviously if I exchange a lot of cash and the ratio worsens (reasonable to expect) I'd come home with less at the end of my contract. |
have a little USD stash handy if possible, so if the won tanks, you can spend USD and not spend won till it hopefully crawls back one day.
yes, Korean inflation is very high for an industrialized country, it's one of the highest if not the highest in the OECD and I think they understate official stats.
You'll figure it out soon the moment you see Korean prices. Don't buy anything in Korea unless you have to.
Stock market (US market) has been up 6% over the last 2 days. and Korean stocks were up almost 4% today, but the won rate has barely improved.
that suggests to me, no shorts are getting out and certainly no one wants to buy the crappy piece of _____.
When stocks tank again, the Korean govt won't have enough money to defend 1200. They won't be that stupid. |
Agreed, sound analysis.
Sound logic regarding holding dollars too. It'll likely reach 1300 in the next few months and even 1500 within the next 6 months, exchanging 1000 USD for 1,500,000 KRW would feel pretty good assuming inflation hasn't gone nuts.
Then if I catch it anywhere near 1000 KRW=1 USD when I finish my contract I'll be good to go! |
if it goes to 1300, much less 1500 and you think it'll go back to anywhere near 1000 after merely a year, you'll be very very disappointed.
your only hope of getting that rate in a year's time is if stocks don't tanks and the rate can hold at 1200. Then in a year, it may crawl back down to around 1050-1075.
remember, the won always spikes up. quickly. then crawls back down, slowly.
that's why the most junior trade or Money Manager knows to sell the won first and ask questions later. |
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spacechase
Joined: 21 Nov 2009
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| Posted: Thu Oct 06, 2011 12:24 am Post subject: |
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thanks for the quick education and the link, rainism~
let's hope this spike is temporary :/ |
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Evanzinho
Joined: 10 Apr 2008
Location: California
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| Posted: Thu Oct 06, 2011 12:29 am Post subject: |
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So, what happened to all the posters who were predicting $1 USD=1000 won by the end of the year?  |
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losthooper
Joined: 25 Aug 2011
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| Posted: Thu Oct 06, 2011 12:36 am Post subject: |
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| rainism wrote: |
| losthooper wrote: |
| rainism wrote: |
| losthooper wrote: |
What's your advice for a teacher coming in a few weeks? Since I get a favorable exchange rate (1 dollar to 1,200 KRW) at first thought it seems I should benefit from an exchange but are the prices of goods in Korea going up right now (i.e. inflation) due to the weakening of the won?
Obviously if I exchange a lot of cash and the ratio worsens (reasonable to expect) I'd come home with less at the end of my contract. |
have a little USD stash handy if possible, so if the won tanks, you can spend USD and not spend won till it hopefully crawls back one day.
yes, Korean inflation is very high for an industrialized country, it's one of the highest if not the highest in the OECD and I think they understate official stats.
You'll figure it out soon the moment you see Korean prices. Don't buy anything in Korea unless you have to.
Stock market (US market) has been up 6% over the last 2 days. and Korean stocks were up almost 4% today, but the won rate has barely improved.
that suggests to me, no shorts are getting out and certainly no one wants to buy the crappy piece of _____.
When stocks tank again, the Korean govt won't have enough money to defend 1200. They won't be that stupid. |
Agreed, sound analysis.
Sound logic regarding holding dollars too. It'll likely reach 1300 in the next few months and even 1500 within the next 6 months, exchanging 1000 USD for 1,500,000 KRW would feel pretty good assuming inflation hasn't gone nuts.
Then if I catch it anywhere near 1000 KRW=1 USD when I finish my contract I'll be good to go! |
if it goes to 1300, much less 1500 and you think it'll go back to anywhere near 1000 after merely a year, you'll be very very disappointed.
your only hope of getting that rate in a year's time is if stocks don't tanks and the rate can hold at 1200. Then in a year, it may crawl back down to around 1050-1075.
remember, the won always spikes up. quickly. then crawls back down, slowly.
that's why the most junior trade or Money Manager knows to sell the won first and ask questions later. |
OK I'll bite, how would you manage the won you earn and save if you were entering on a year contract right now? I assume I'll save 1 million won per month, for a grand total of 12 million. How would you manage that as you go and then at the end? |
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atwood
Joined: 26 Dec 2009
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| Posted: Thu Oct 06, 2011 12:52 am Post subject: |
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| rainism wrote: |
| atwood wrote: |
| rainism wrote: |
this pretty much proves that if it weren't for what looks to be some fairly substantial intervention in the FX market by the Korean govt, the crap won would currently be trading around 1250, at least.
you sell won first.
you ask yourself questions and try to answer them LATER.
http://www.koreatimes.co.kr/www/news/biz/2011/10/123_96115.html |
The government has announced it would keep the won at 1200 or below. |
no.. they haven't announced anything.
they've shown by their action they are defending 1200... for the TIME BEING.
which they can do, as stock markets have bounced/stabilized, at least for the time being.
should a real downleg materialize, they'll give up pissing money up the flagpole, just as they were forced to do in 2008. |
| Quote: |
"Along with the comment from the government official
yesterday, the prevailing view was that it was tough to pull the
dollar/won to the 1,200 level," said a local bank dealer. |
http://www.reuters.com/article/2011/10/05/markets-korea-forex-bonds-idUSL3E7L50WO20111005
The man on the street believes the government has said it will keep the won at or below 1200. That's the news they're getting.
No one that I know of believes that anything the Korean government says is written in stone, so sure if conditions worsen to that extent, they'll give up the ship. |
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rainism
Joined: 13 Apr 2011
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| Posted: Thu Oct 06, 2011 2:30 am Post subject: |
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| atwood wrote: |
| rainism wrote: |
| atwood wrote: |
| rainism wrote: |
this pretty much proves that if it weren't for what looks to be some fairly substantial intervention in the FX market by the Korean govt, the crap won would currently be trading around 1250, at least.
you sell won first.
you ask yourself questions and try to answer them LATER.
http://www.koreatimes.co.kr/www/news/biz/2011/10/123_96115.html |
The government has announced it would keep the won at 1200 or below. |
no.. they haven't announced anything.
they've shown by their action they are defending 1200... for the TIME BEING.
which they can do, as stock markets have bounced/stabilized, at least for the time being.
should a real downleg materialize, they'll give up pissing money up the flagpole, just as they were forced to do in 2008. |
| Quote: |
"Along with the comment from the government official
yesterday, the prevailing view was that it was tough to pull the
dollar/won to the 1,200 level," said a local bank dealer. |
http://www.reuters.com/article/2011/10/05/markets-korea-forex-bonds-idUSL3E7L50WO20111005
The man on the street believes the government has said it will keep the won at or below 1200. That's the news they're getting.
No one that I know of believes that anything the Korean government says is written in stone, so sure if conditions worsen to that extent, they'll give up the ship. |
I'm sure the govt will be practical. If stocks don't take a massive dump, it makes sense for them to defend 1200, they make even make money on the intervention (most times central banks actually DO)
but if stocks tank sharply, they won't be sticking their finger into that dike.. they may simply try to lessen the spike.
the only time they massively and bluntly intervened in the market, in desperation, was in Dec of 2008, when many many Korean corporations had derivatives bets on called so called KIKO contracts (in reality, an options strangle) which bet that they USD/KRW rate would remain between 900-1300. All of these bets were blowing up in the face of Korean companies, so the govt did a massive intervention to push the rate down from 1300 something back down to 1250 in last days of December, presumably when some/many of these contracts were expiring.
it blew a big wad of its foreign reserves with that action, because with the new year, the crap won quickly crashed to 1400, then 1500, then 1600. |
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rainism
Joined: 13 Apr 2011
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| Posted: Thu Oct 06, 2011 2:34 am Post subject: |
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| losthooper wrote: |
| rainism wrote: |
| losthooper wrote: |
| rainism wrote: |
| losthooper wrote: |
What's your advice for a teacher coming in a few weeks? Since I get a favorable exchange rate (1 dollar to 1,200 KRW) at first thought it seems I should benefit from an exchange but are the prices of goods in Korea going up right now (i.e. inflation) due to the weakening of the won?
Obviously if I exchange a lot of cash and the ratio worsens (reasonable to expect) I'd come home with less at the end of my contract. |
have a little USD stash handy if possible, so if the won tanks, you can spend USD and not spend won till it hopefully crawls back one day.
yes, Korean inflation is very high for an industrialized country, it's one of the highest if not the highest in the OECD and I think they understate official stats.
You'll figure it out soon the moment you see Korean prices. Don't buy anything in Korea unless you have to.
Stock market (US market) has been up 6% over the last 2 days. and Korean stocks were up almost 4% today, but the won rate has barely improved.
that suggests to me, no shorts are getting out and certainly no one wants to buy the crappy piece of _____.
When stocks tank again, the Korean govt won't have enough money to defend 1200. They won't be that stupid. |
Agreed, sound analysis.
Sound logic regarding holding dollars too. It'll likely reach 1300 in the next few months and even 1500 within the next 6 months, exchanging 1000 USD for 1,500,000 KRW would feel pretty good assuming inflation hasn't gone nuts.
Then if I catch it anywhere near 1000 KRW=1 USD when I finish my contract I'll be good to go! |
if it goes to 1300, much less 1500 and you think it'll go back to anywhere near 1000 after merely a year, you'll be very very disappointed.
your only hope of getting that rate in a year's time is if stocks don't tanks and the rate can hold at 1200. Then in a year, it may crawl back down to around 1050-1075.
remember, the won always spikes up. quickly. then crawls back down, slowly.
that's why the most junior trade or Money Manager knows to sell the won first and ask questions later. |
OK I'll bite, how would you manage the won you earn and save if you were entering on a year contract right now? I assume I'll save 1 million won per month, for a grand total of 12 million. How would you manage that as you go and then at the end? |
common sense... spend the USD account when the won is tanking and spend the Won account when it is at least relatively firm.
obviously you will have your normal living expenses, but you've already factored that in.
it really depends on what the stock markets do. If they take out the most recent lows with any conviction, they're likely to go a bunch lower, and the won is likely to get a lot weaker.
if you have sufficient USD reserves, don't spend your won savings when rate gets above 1250. Wait the storm out, if you can. |
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Yaya
Joined: 25 Feb 2003
Location: Seoul
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brucefox
Joined: 23 Jan 2011
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| Posted: Thu Oct 06, 2011 9:28 pm Post subject: |
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If you have some money saved back home, as in you sent a sizable chunk of money you earned in Korea and maintain a good balance in your home bank account, you could transfer most of it back to Korea for some profit.
And hold it here until the dollar goes down a bit again.
It's no really a huge loss unless your loan payments are over 1000 dollars a month and you keep a very light balance in your account.
-Okay this wouldn't work if you are going back home soon-
And don't worry. Europe is doing everything it can to save Greece, which is quite dumb..... If they just kicked them out of EU, all this scare would be over since they'd be saving a LOT of money and provide jobs for more Germans and French... But then the Greeks wouldn't want that, would they?
U.S. and Japan wouldn't let Korean won go to gutter either. remember the 97's financial crisis in Korea? That was REALLY dire, looked like the whole country was gonna go bankrupt for decades and It only lasted a couple of years because nations panicked and rushed into help. |
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