Korean Job Discussion Forums

sojourner1 · Posted: Sat Jun 28, 2008 7:36 am Post subject: Why is the Won depreciating?

I noticed that my pay is the same despite getting a 10% increase in pay this year from last year due to a 10% decrease in Won to USD value. Australian teachers claim it's 25% decline for them from last year. And the won keeps it's steady decline. Today, it's hitting 12% as it's 1040 Won to the dollar instead of 930 like it was last year.

This must have something to to do with politics such as a new president elected in last December. But how?

We all know the dollar is facing rough times. Why is the won falling faster than the dollar to the point of being weaker? I've been warned from several sources that a crash in Korea and America could occur soon. I sure hope not.

Whistleblower · Joined: 03 Feb 2007

This is because foreign investment is down in Korea, FACT!

michael5799042 · Joined: 16 Jan 2008

A few possible reasons:

1) Korea is the world's 4th largest importer of oil
2) Korea has screwed over foreign investors for trying to make a profit in Korea (Lone Star's investment in KEB bank). So, if you can't make a profit on an investment here why invest here?
3) It is not the new president that is damaging, it is the rejection of the new president that is damaging. Judging by the protests does this look like a country that is willing to make some tough decisions and open itself up to the world?

And some longer term problems:
1) Korea built its economy by copying other products and there is nothing stopping other coutries from copying the same products and selling them for less.
2) Korea has the world's lowest birthrate. Therefore, they will all get old before they have a chance to get rich. This problem is also unlikely to be remedied by a newfound acceptance of immigration. Why invest your money in a country populated by old people?

There are also many external factors, but that is another topic.
In short (unless you know what you are doing) I would recomend keeping your money in the currencey that you plan to spend it in.

Whistleblower · Joined: 03 Feb 2007

But currency is all relative.

michael5799042 · Joined: 16 Jan 2008

Relative to... other currencies? Yes, there are many out there.

caniff · Joined: 03 Feb 2004 Location: All over the map

Brady · Joined: 25 Jul 2006 Location: Bucheon

Korea isn't the lowest in birth rate, by most accounts. Japan is further down there, as is Hong Kong.

Bigfeet · Joined: 29 May 2008 Location: Grrrrr.....

Your currency need to stay cheap if you want to be an export economy.

Ya-ta Boy · Joined: 16 Jan 2003 Location: Established in 1994

In addition to the reasons listed above, the government has had a weak Won policy for some time. It makes their exports cheaper and therefore more desirable. It is reconsidering this policy now that the price of everything is going up.

Yesterday · Posted: Sat Jun 28, 2008 3:59 pm Post subject:

The Korean won has been becoming weaker each month for the previous 2 years....

Korean won compared to United states dollar - (2 year period)

[img] http://farm4.static.flickr.com/3024/2618960855_6525cf1bf7.jpg?v=0 [/img]

Korean won compared to British pound - (2 year period)

[img] http://farm4.static.flickr.com/3082/2618960815_af703663cc.jpg?v=0 [/img]

Korean won compared to Canadian dollar - (2 year period)

[img] http://farm4.static.flickr.com/3277/2619784300_0e558104d8.jpg?v=0 [/img]

Korean won compared to Australian dollar - (2 year period)

[img] http://farm4.static.flickr.com/3169/2619784272_de432beb02.jpg?v=0 [/img]

However - it was much WORSE 4 years ago -

Korean won compared to United states dollar - (4 year period)

[img] http://farm4.static.flickr.com/3082/2618960815_af703663cc.jpg?v=0 [/img]

Korean won compared to British pound - (4 year period)

[img] http://farm4.static.flickr.com/3203/2618960725_3f43472eb3.jpg?v=0 [/img]

so compared to 4 years ago - the Korean won has actually IMPROVED...

The glory days of the year 2000, 2001 (when the Korean won was very strong) are over....

cedarseoul · Joined: 16 Feb 2008 Location: nowon-gu

the ireland · Joined: 11 May 2008 Location: korea

Yesterday · Posted: Sat Jun 28, 2008 5:41 pm Post subject:

aka Dave · Joined: 02 May 2008 Location: Down by the river

Current account deficit is your trade deficit, budget deficit, which both effect the strength of the currency. For most of the spring, Korea's current account deficit was ballooning. However, recently, it's being going down.

http://news.ino.com/headlines/?newsid=62620081191

So hopefully, the won should improve in the short term. The big reason is the price of oil. Importing gobs of oil hits Korea's trade balance sheet hard. But it's not just oil, it's commodoties in general. Krugman had a piece in the NYtimes about how not just the price of oil has skyrocketed, but commodities like iron ore have as well, due to increased Chinese demand. American domestic steel production has resumed because of international demand.

All of these resources Korea has to import, and they used to be relatively cheap. No longer. Importing them hurts their trade balance, which hurts the currency.

As long as China (and India) are developing at the pace they are, this is going to be a problem for the won.

Ya-ta Boy · Joined: 16 Jan 2003 Location: Established in 1994

The only time the exchange rate has been decent was between Jan '06 and March or so of this year. I consider 'decent' to be under 1000, like it was back before the collapse of '97.

Jan. '97 W857.5
Jan. '98 W1,695
Jan. '99 W1,187.5
Jan. '00 W1,128.00
Jan. '01 W1,279
Jan. '02 W1,317.4
Jan. '03 W1,190
Jan. '04 W1,195.1
Jan. '05 W1,038
Jan. '06 W1,010
Jan. '07 W930
Jan. '08 W935.8