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Lost500
Joined: 24 Jul 2010
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 Posted: Wed Dec 22, 2010 12:06 pm Post subject: Currency - face facts |
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I have read a lot here about the Korean won & how it is deflated on purpose by the powers that be. I am certainly not saying anyone is wrong & many say the same thing.
To me it is a possibility, they cannot devalue the won as they could not afford to buy raw materials or import anything. This seems to me fairly simple but as I said please clarify why so many have this belief.
I will also go way out on a limb here & say the US dollar has become stronger against the won but if you consider the won against the pound (UK sterling) the pound has weakened since 2006.
I know UK is in turmoil but I am making from this.
I am asking for proof & it seems to me many jump on a wagon but look at import vs export logically & look at figures. I feel many try to scare & I was scared but I eventually looked at facts, won fluctuates & won vs other currencies is fine.
Just tell me where you economists, I am not one, get your informations from.
I am not being judgemental but I just need to understand, I m sure many of you know better than me.
Regards & get the won up up up & Merry Christmas. |
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Lost500
Joined: 24 Jul 2010
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| Posted: Wed Dec 22, 2010 12:10 pm Post subject: |
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dont bother with criticising any shotcoming in English, I typed in a rush - informations stands out but I was thinking letters not numbers ha ha, respect to those who troll looking for errors - theres 3 more but tell your mom not me.
Tell me how is makes sense to devalue a currency! |
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Vagabundo
Joined: 26 Aug 2010
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| Posted: Wed Dec 22, 2010 3:19 pm Post subject: |
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the pound sterling is a special case. It was wildly overvalued before the crash once it started trading above 1.8 to the USD. (actually went as high as 2.1 I think)
what happened to the won is it became wildly undervalued as the ddong hit the fan and the won turned into dong at 1600 to 1.
Every currency was weakening vs the USD back then, but nothing as mucha s the won. Since then, all those currencies, and especially Asian currencies have come roaring back against the USD, often equaling if not exceeding their 2007 USD rates.
The won remains 15-20% weaker than its 2007 USD rate.
The won has lost on average, about 7-8% just this year, in 2010, vs many of its Asian neighbors. It has lost 10% just THIS year, vs the Thai baht.
the won is trading near or not too far off its worst early 2009 levels against many other currencies, especially its Asian neighbors.
seriously.. are you daft? ever looked at some tables? I've posted many here.
why would they want to suppress their currency?
because the cheobol is the heart of their industrial engine and a lower currency always favors an exporter, even while raising some other costs, especially oil, commodities, etc since they have to be imported and are priced in USD.
Korea has manipuilated its currency into a sweet spot where it's just a bit weak vs the USD but VERY weak against the currencies of its exporting competitors. |
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gogophoto
Joined: 20 Feb 2010
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| Posted: Wed Dec 22, 2010 3:50 pm Post subject: Re: Currency - face facts |
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| Lost500 wrote: |
To me it is a possibility, they cannot devalue the won as they could not afford to buy raw materials or import anything. This seems to me fairly simple but as I said please clarify why so many have this belief.
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As far as this is concerned, consider that Korea is an economy that trades in hi-tech goods--that is, they buy raw materials (more or less) and they make fancy, expensive stuff out of it. The end product is worth more than the cost of the materials and labor needed to create it--therefore it creates value for Korea. The amount of this value created for Korea more than offsets the small increase in cost that a (mildly) devalued currency creates when buying the raw materials from other countries.
Therefore a mildly devalued currency does hurt them a little when buying raw materials, but helps them a lot when selling their exports and creating value.
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I am asking for proof & it seems to me many jump on a wagon but look at import vs export logically & look at figures. I feel many try to scare & I was scared but I eventually looked at facts, won fluctuates & won vs other currencies is fine.
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What kind of proof do you want? Any number of articles detailing how they buy and sell foreign reserves in order to prevent their currency from leaving a certain 'safe' zone? |
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Vagabundo
Joined: 26 Aug 2010
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