Why do we care about 'Won-Dollar Rate'?

I read an article talking about the international value of Won currency. It says that Won currency fell to its weakest point against Dollar and Yen among recent years’ figures, which means that we need to have 1,033.7 Won to buy a Dollar and 1,061.58 Won for 100 Yen.

As the countries are getting more and more related to each other, the effects of an event taking place in a certain part of the world is spreading its range to all over the world. Economically, this situation is very important because things happening in U.S.A surely effect the economy of Korea. In this kind of circumstances, a remarkable change among currencies is very important. People become happy and unhappy by the ups and downs of a certain currency against others. Why? What about it? Well, there are some good aspects as wells as bad aspects when a certain currency’s value falls or rises.

If Won-Dollar rate goes up, corporations which are exporting good to U.S.A will be happy. They can sell more products than they did before, because the prices of the goods they are selling to America will be relatively cheaper. On the other hand, companies which are importing goods from America to Korea will be unhappy if the Won-Dollar rate goes up. They have to pay more money than they did because the value of Won currency against Dollar has gone down. Then, the prices of the imported goods in domestic market will rise in order to profitable for those companies who have imported it. Consequently, this will affect other economy markets in Korea and eventually will bring inflation.

The above explanation is not just a theory, but a real practice which is taking place right now. Then, what should we do about it? Well, there is no best answer. The change itself is not 100 percent bad. It brings good effects to some people, as well as bad effects to some people. And also, blocking changes in currency values is impossible because the currencies are somewhat organic. They go up and down. They don’t stay still. So, it is rather good to try to block rapid changes than trying to block the change itself. Then, it won’t affect the markets greatly in a certain period of time. Furthermore, we should develop our economy qualities, not just growing its volume. Then, we will become stronger and will be able to make ourselves be safe even in rapid changes. We all know that it’s not easy in real life. There are lots of things for us to concern, and we can’t even control all the things that we are supposed to care of. As it is said before, there is no best answer. We just have to do our best to survive in this rapidly changing world market.

Reference : http://www.koreatimes.co.kr/www/news/biz/2008/03/123_20871.html


20700273 Park, Yong - Kyun Entry 2