Korean Job Discussion Forums

[English Matt]

OK, time for another Won thread...I know, how original.

As this board tends to have a bit of an America-centric aspect when it comes to discussions about the declining won, I thought I'd add a thread for us Brits. Not meant as a dig at other users on this board at all - it's just that the situation for us is quite different at the moment.

So the won has lost another 7% against the pound this week; not great, granted. And yes as other users have mentioned on this site, there is always a chance (albeit slim) that the won could decline all the way down to 2000 won against the dollar. To top it all, none of the experts expect the won:dollar rate to improve much anytime soon.

However, given the fundamentals of the economy in the UK: imminent recession, 50% increase in unemployment over the next year, increasing public borrowing, expected large rate cuts by the BofE in the next few months, deflation and grim retail sector data (released today)....you can be sure that the pound isn't going to advance much further than where it currently sits against the dollar (which is around the $1.50 mark), and is most likely to continue it's own decline.

This means that on a salary of 2 million per month, even if the won drops to 2000 against the dollar, we will still be making �666. Now whilst this is the sign of the beast it isn't altogether awful, when you figure that you would only ever be saving about half of your salary at best anyhow. So in the worst case scenario you should still be able to sock away at least �300 per month (approximately 33% less than before this crisis started).

Also, predictions are that in 2009 the pound could achieve parity with the dollar (�1 = $1), and most analysts are pretty certain that it's going to decline to $1.28 at least. In this scenario, on a salary of 2 million won per month, at 2000 won to a US dollar, you can expect to save �350, or thereabouts, per month. If it goes down to 1:1 then you can expect to save about �450 (about the same as before this whole crisis).

So, to end my long ramble. If the won declines to 2000:1 dollar, the worst case scenario is, you can expect to save about �300 a month, best case scenario is, you can expect to save �450 a month.

However, the won is unlikely to decline so drastically, the pound is unlikely to decline so drastically, so expect to keep saving in the �350 - �400 region per month for the next year on a 2 million won salary and don't stress too much about things.

N.B. The above calculations are assuming an average monthly saving of 900,000 won per month.

[PeteJB]

Just on a related note, let's say I transfer 2000 pound to Korea - For the sake of the argument let's say that will get me 5 million won. But, if that same pound is put into dollars it will only get me about 4 million won. When transferring from HSBC, I have the option to select 'send the equivalent amount in pounds' or 'send as USD in the following amount' - By selecting the option to send equivalent value, does that mean my money is sent as dollars anyway? So I am actually losing money that way?

[English Matt]

Without seeing the HSBC site, I'm not sure I can provide a useful response. However, as you state the options are "send the equivalent amount in pounds", and "transfer in USD in the following amount". I'm guessing there are two possibilities.

1. Either HSBC only wires money from the UK as US dollars. Therefore if you wire �2000 to Korea, and say that �2000 is worth $2964, then HSBC will wire your money, as US$, in that amount. The other option ("transfer in USD in the following amount") may be there because you decide you actually want to round that figure up to $3000 or whatever number floats your boat.

2. Send the equivalent amount in pounds could mean that you have told the HSBC site that you want to wire 5 million won (lets say that is �2000) to Korea, so it is offering to wire the equivalent amount in pounds (�2000). The receiving bank in Korea would then receive that money and deposit it into your account as the equivalent won value (lets say 5 million won again). For whatever reason, maybe your bank also allows you to send your money as US$ as well, hence the "transfer in USD in the following amount". I guess sending as US$ is more useful to some people sending remittances back to people in other countries where the currency can fluctuate a lot (one example that springs to mind is people in the UK sending money back to folks in Zimbabwe).

In that case, I would imagine your bank would convert your �2000 into lets say $3000. Now in our imaginary financial world we're creating here, lets say �2000 and $3000 are both worth 5 million won. So even if your money is converted, sent, and received by your bank here in Korea as US$ you shouldn't lose any of it's value.