Korean Job Discussion Forums

[Darkness]

Can someone please explain to me how the exchange rate works. Is the USD the baseline for comparison? I have been reading people saying that if the economy in SK is shaky the closer to par it gets, which doesn't make sense to me.

What would need to happen in order for me to be getting 800:1 Won:CDN again?

[kprrok]

The exchange rate can be based on any currency you wish. The most common ones are GBP, Euro, USD, and Yen for base rates.

Basically, the currency will get stronger if the economic outlook for that nation is good. The opposite is also true, it will get weaker if the outlook is poor. This is what's happening in the US right now.

Basically, a stronger currency means it can buy more of a foreign currency. A stronger dollar can buy more KRW than a weaker dollar. Stronger means the rate is going up.

Theoretical example:

Day 1: 1USD = 1,000 KRW
Day 2: 1USD = 1,100 KRW
Day 3: 1USD = 1,000 KRW
Day 4: 1USD = 900 KRW

Between days one and two, the USD got stronger, probably based on good news in the economy. This happens because more people are buying the dollar for savings or to make purchases.

Between days two and three, the dollar weakened back to the Day 1 rate. This means the KRW got stronger, possibly because more people were selling the dollar to buy more KRW while trying to make a profit.

Between days 3 and 4 the dollar weakened more and the KRW got much stronger. This could be from good news in Korea, or negative news from the US.

Stronger currencies help importers, while weaker currencies help exporters. Korea wants a weaker currency because they export a lot of stuff, with the big exception of oil.

I believe the $CDN is around 1:000 KRW right now, I don't check often. For it to get back to 800, there would have to be some serious problems in the Canadian economy or something very, very strong in the Korean economy. I don't see it happening anytime soon, to be honest.

Does that make sense?

KPRROK

[jay-shi]

[kprrok]

I guess I should have made that a bit more clear. For fluctuations to be that big and that quick would be completely out of character for the markets. I don't think you'd ever see anything like that. I could have made the difference 1 KRW/USD, but I like bigger numbers to show points.

Like my high school physics professor told me, if you're trying to figure something out, use extremes to make it easier to understand the small stuff.

KPRROK