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Swampfox10mm
Joined: 24 Mar 2011
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 Posted: Thu Dec 13, 2012 12:26 am Post subject: Playing the exchange game with the fiscal cliff |
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Anyone considering this?
The Korean won to the US dollar is now at 1078 to 1 today. The won has strengthened lately, and I have a feeling it may weaken again if/after a fiscal cliff deal is reached. If the US dollar drops further before the final days before the fiscal cliff, it's possible to make a little bit of cash through bank transfers back/forth.
Anyone feel lucky? |
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Knucklehead
Joined: 06 Jan 2008
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| Posted: Thu Dec 13, 2012 2:27 am Post subject: |
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I'm no economist but it seems to me that the Korean won, over the past couple years, because it's an export economy (and perhaps psychological factors like remembering what happened during IMF), has always been affected aversly by downturns in Europe and America -- so the korean won would lose value because of the fiscal cliff. (remember 2008?)
Having said that I think the Korean government is much more proactive these days in controlling the exchange rate after the economic meltdown of 2008. The won went up to as high as 1800 per $1 if I remember correctly.
So i think, er, it's not gonna budge that much... could be wrong tho |
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newb
Joined: 27 Aug 2012
Location: Korea
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| Posted: Thu Dec 13, 2012 2:34 am Post subject: |
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My crystal ball shows 900s to 1 by end of 1st quarter of next year.  |
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Zyzyfer
Joined: 29 Jan 2003
Location: who, what, where, when, why, how?
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| Posted: Thu Dec 13, 2012 6:45 pm Post subject: |
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| newb wrote: |
| My crystal ball shows 900s to 1 by end of 1st quarter of next year. |
That would be heavenly for me as I am trying to aggressively pay off something back in the US.
| Knucklehead wrote: |
| So i think, er, it's not gonna budge that much... could be wrong tho |
I'm no economist either, and I rarely get to put the wee bit I do know to good use through conversation. But I tend to agree with this.
The won has appreciated but it hasn't been a dramatic shift. I want to conjecture that it's simply a correction. There was news a while back that Korea would consider taking a more hands-off policy regarding the exchange rate and I think that is what led to the appreciation.
I think the fiscal cliff affair will impact other markets more than Korea. But you might as well call it a gut feeling since I'm playing armchair investor.
Plus if you're just doing straightforward bank transfers then you need a fair bit of capital for it to be highly profitable. Nobody needs to whip their wallet out to measure; I am just suggesting it might be more lucrative to consider forex trading with all its goofy leveraging etc. 
edit: Looking up other stuff and came across this article which is implying that the won will continue to strengthen even though authorities are trying to curb it. It doesn't relate the US fiscal cliff to any of this but unless something drastic happens in the financial world then I doubt the won will become volatile enough to profit from currency exchanges. |
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KimchiNinja
Joined: 01 May 2012
Location: Gangnam
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nate1983
Joined: 30 Mar 2008
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| Posted: Fri Dec 14, 2012 1:48 pm Post subject: |
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You're not going to make money transferring money back and forth overseas, transaction costs (bid-offer spreads) are way too high.
I've spent the past couple years in finance reading Bloomberg news pretty much every day and most of the short to medium-term fluctuations in "risky" currencies (basically everything but the yen) vis-�-vis the US dollar has to do with the level of optimism about the global economy. Do a bit of research on "risk-on, risk-off" which has become a somewhat annoying phrase now thrown around all the time in the industry. Risk-on means people are optimistic and will buy riskier assets, meaning emerging market currencies are up, equities are up, implied volatilities are down and Treasury yields are up. Risk-off is a flight to safe assets like the US dollar and Treasuries. Basically supply and demand.
Analysts like the Bloomberg guy tend to concentrate on macroeconomic fundamentals. That works in theory (and maybe the long run) but I wouldn't bet the farm on what they say. |
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