Dollar Value to Fall Relative to the South Korean Won
Last Updated on Saturday, 13 February 2010 02:27 Written by admin Wednesday, 27 January 2010 01:33
The Won/Dollar exchange rate, which was about 1010 before Leiman Brothers collapsed in 2008. Since then, the exchange rate got as high as 1600 Won/Dollar but has since dropped to level more comparable with the value before 2008. Author Cho Jin-seo gives several key drivers to this movement including a low interest rate in the United States, a reevaluation of the Chinese Yuan, increases of dollar denominated foreign direct investment, and increased sales of sea vessels from Korean ship builders. The Big Mac Index is used to back up these findings …
“The argument that all these factors will push up the won’s value against the dollar is supported by many other researches. Some of the “more digestible” evidence comes from the so-called “Big Mac Index” by The Economist. Considering the price of a hamburger meal in South Korea in comparison to that in the United States, South Korea’s won has the potential to rise for 20 percent against the dollar in the long term, the witty index showed.”