Just a small reminder to Hole readers that admist the nuke talk, get your dollars now. The won is in freefall now and has already lost 1.5% of its value in a couple hours. Get your savings pulled out now before things get really bad.
Get to that bank!
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That’s just stupid. Joining the panic at this time the surest way to lock in exchange loss. Unless you’re leaving today, there’s no reason not to ride out this temporary distress.
Looks like a good time to BUY Korean won. Like the smart ones did that day the won went 2,000 to the dollar during the 1997 currency crisis.
Actualy I disagree. Most analysts were expecting down ward pressure on the won anyway with targets ranging from 1000-1100 anyway. This is likely just to exacerbate things.
Might be a good way to make 10% or so on your money in the next couple days.
On the other hand, I plan to pull a chunk of money out just in case I need cash to get my family south.
I should mention as well regardless of gains, do you really want to be the one left holding the bag like in ‘97 when the won started out around 900 and in a few days melted to 2000 per? Sure you old timers can say it did not turn out that bad, however I wonder what you thought when the house came collapsing down around you?
Well, George, what caused the bulk of the devaluation was everyone panicking and running out and buying up all of the USD reserves. The world will continue to revolve… Everything will continue as normal. The exchange rate will stabilize quickly and drop a little slower.
Don’t contribute to the panic. There is still no confirmation that there was actually a nuclear test and not just a coincidental earthquake or the detonation of conventional bombs…. Even if it was a nuclear test, that is a long way from being a nuclear weapon.
No reason to make the situation worse. Everyone just hang on to your coins.
“Don’t contribute”? You gotta be kidding me! The aggregate Won holdings of anyone who reads this can’t me more than a million or so USD. Not even a burp in the global currency marekts.
A coincidental earthquake with a 20-minute warning beforehand to China, that just happened to take place at a known, monitored test site?
I have to say that i honestly can’t believe the amazing level of ridiculous and flat-out ignorant comments this entire event has spawned from people that I otherwise had assumed were reasonable people.
Jeff, I hope that was the morphine talking. Go back to bed.
Every one exchanged, every stock sold contributes.
Who are these analysts expecting “downward pressure” on the Korean won anyway? There’s no such thing — the Korean currency is facing severe appreciation pressure, in fact. Capital flight is one thing, but remember, there isn’t all that much foreign direct or indirect investment here to begin with. The other factor is balance of payments — Korea’s huge and growing trade surpluses (thanks to decades of government efforts to encourage not buying anything imported, the ships go out full and come back empty) mean that Korean won will just get stronger. Ever hear of “endaka”? That’s what we’re headed for.
Every WON exchanged…
“Even if it was a nuclear test, that is a long way from being a nuclear weapon.”
North Korea has had nuclear weapons for at least 10 years. The timing of this nuclear test is just political positioning. I expect the won will continue to gain against the dollar for another year or so.
Financial times article on the Impact of the test
– and from the scotsman –
Listen to Brendon Carr.
Unless you have a Doctorate in Hard Math and understand how the heat transfer theorem is applied to currency fluctuation then stay away from currency exchange.
And if someone does have the abilities mentioned above you should not be in Korea.
Currency speculation is a very dumb idea.
Everybody back to work and shut up!
Now, this is different than Asian financial crisis. Economies go up and down, so it makes sense cashing in when things are low due to an economic downturn. However Atomic weapons don’t just clear up over a few years. Once a country has them it has them and will discourage investment into the region.
When combined with recent report in the Chosun that claims almost $10 Billion in foreign capital has fled the Korean economy within this year (2.5 being the norm for the previous years), due to several large players being “Lone Stared”, and combine this with an agressive North and withdrawing US Army, then you might have a good reason to move your money.
I would say do what you think is the right thing but the last thing anyone should be doing is to go to any blog, anywhere, period, for personal financial advice.
Personally (and this is just me), I won’t buy property in South Korea, nor will I put large sums of MY money into one of their banks.
Dram_man (from #5 above):
Well, I distinctly recall having a conversation with Wedge (who contributes his opinions to conversations on this blog) and one of his friends at O’Kim’s in the Westin Chosun Beach – his friend asked me how I could be so upbeat, considering that my salary had just halved. I replied that it had only done so if one thought of converting the funds at that time. As my plans to live and work in Korea were longer-term than that, I didn’t need to worry.
Indeed, during those heady days, I made a fair bit of money through a little arbitrage at the local KEB. I went down there each day during the period of the won-dollar flip-flop, legally buying and selling at profit. At the end, after about a week and a half, I had made several times my (then) monthly salary in profit.
Does it sound like crowing, Dram_man? It should. Perhaps you should listen to the ‘old-timers’, or at least those who demonstrate an acumen in this area.
Brendon> Let me dig a bit. Worth noting meanwhile that the won has been a on steady march down the past week. As for capital fight, granted its not much to move, but such are usually illiquid. I would be more worried about the risk attached to Korean paper which can cause things to get ugly awfully fast (partly what percipated ‘97).
gbnhj> I agree with you entierly, however you have to remeber that long, long, long slide south. Sure you may have made money once you realized what was going on (and espsicaly on the uptick). How long did that take? When a meltdown was happening in the summer and early fall were you making your trips to KEB? Take this in what may be an early warning.
I am not saying the decline will be as big as the IMF, infact far from it (I expect things to stabilize around 1100, or about10-15%), however I am unsure if the Won will bounce back so fast. The Nuke issue is a longer term security situation, not simply covering short term paper (which the IMF covered in the end in ‘97).
Most stuff I have read said that the won has hideously overvalued in 1997. I do not hear that these days. In fact, the Economist’s latest Big Max Index would say the won is about 16% OVERvalued:
http://www.oanda.com/products/bigmac/bigmac.shtml
Crap crap crap. Of course I meant UNDERvalued.
And if the won is 16% undervalued against the dollar, that means the won may be expected to come under pressure to gain value. From W950=$1.00 a 16% adjustment takes us to W820=$1.00. Selling out your won now is a sucker’s bet, because what’s going to happen will be an overshoot in the classic (endaka) sense — hello W750=$1.00. Put that together with the ill-conceived (okay, idiotic) policy choice of the Roh “administration” to choke off the supply of new housing construction in Seoul, and being a homeowner (as I am) will look real smart in the next three years. The best part is, I bought that apartment with Korean currency mostly earned when Won was W2000=$1.00 or, more realistically, W1300=$1.00.
The bad news is, most of my clients want to be billed (and pay) in US Dollars.
Mr Carr – What is “endaka”? Is it something we should worry about?
Sounds like Uncle Sam is about to get a bargain on overseas housing allowance.
Must be bad news for the USFK servicemembers/employees that are in collusion with the Koreans; their kickbacks are going to be worth much less in dollars if they ever go back to the States.
Guess they’ll be paying for that new Mercedes/BMW/Lexus in won sometime in the next few weeks. Better pull that money out of the mattress and spend it, ajumma!
Either way, I’ve already lost a little fortune because I’m Canadian. The Canadian dollar is, in my opinion, overvalued right now.
Sell the baby rings! We’re all gonna die!
Yes, the won has recovered a bit today, but my chips are still in the US Dollar space.
Do not worry folks, if I am wrong am more than willing to take my lumps.
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