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Currency Report Korea Currency
Currency Report Korea Currency
Introduction
Current exchange rate to the USD 1 dollar = 1,183.48 South Korean won
In manufacturing, mining, construction, electricity, and water and gas industries, the
manufacturing industry became the driving force for economic development in the 1980s. Korea's
steel. Top export industry are integrated circuits, cars, refined petroleum, passengers and cargo
ships, etc. Values of each of them are integrated circuits ($104B), cars ($40.1B), refined
equipment, coal briquettes, etc. Values of each of them are crude petroleum ($56B), integrated
circuits ($38.6B), petroleum gas ($17.3B), photo lab equipment ($17.7B) and coal briquettes
($13.3B).
Order of top export countries are China, United States, Vietnam, Hong Kong, Japan, etc. Export
values for each country are China ($150B), United States ($69.4B), Vietnam ($47.7B), Hong Kong
Order of top import countries are China, Japan, United States, Germany, etc. Import values for
each country are China ($98.1B), Japan ($54.2B), United States ($48.7B) and Germany (19.7B).
In 1965, South Korea recorded low inflation. Wheat against inflation has weakened consumer
demand and dropped agricultural prices as weather conditions improved production. The Bank of
Korea lowered its economic growth rate for the June quarter to 1.0 percent from the previous
report, saying exports were weaker than previously expected. Agricultural prices fell 11.4 percent
fluctuations in food and energy prices, was 0.8 percent. South Korea's inflation is very weak on
historical standards and is far below the bank's two percent target as consumers and businesses
According to the graph at the bottom, between 2014 to 2018 inflation rate is higher than 0 but
after 2018 which is in 2019, inflation rate is getting lower and lower which is almost -0.5.
Korea's per capita gross domestic product (GDP) reached a record USD $26761.90 in 2018.
South Korea's per capita GDP is equivalent to 212 percent of the world average. South Korea's
per capita GDP stood at USD $10327.09 from 1960 to 2018, USD $26761.90 in 2018, the lowest
ever at USD $944.30 in 1960. Basically, GDP per capita is getting higher and higher.
On the economic, the ratio of government debt to GDP is the ratio of government debt to GDP. A
low GDP ratio means an economy that produces and sells goods and services sufficient for debt
repayment without falling into default. However, look at the table and graph at the bottom. Debt
to GDP ratio is getting higher and higher. That means Korea is not productive and sufficient
Current event
Currently, there’s current event happening in Korea called “Japan and Korea trade war”. This is
the most important current event which is happening these days. It happened in July 4th 2019
and it didn’t finish. South Korea and Japan are caught up in a severe trade war that could affect
the world economy already suffering from the trade war between the United States and China.
Last month, Japan announced that it would strengthen regulations on fluorinated polyamide,
photoresist and hydrogen fluoride, which are indispensable for semiconductor production. Under
the new regulations, Japanese companies may need a license to import each chemical into
South Korea and take up to 90 days. Semiconductor, which is the main component of electronic
equipment, is Korea's largest export item so far, the delay in production could have a significant
impact on the economy. Japan said it would impose such restrictions on South Korea, believing it
had leaked confidential information to North Korea, but gave no details. After South Korea
strongly denied it, Japan strictly eliminated trade restrictions, including deleting South Korea
from the "white list," an indicator of its trade partner. As a result, exports of automobile parts and
household electric appliances to Korea will be delayed further. Look at the bottom two tables
which is about export and import countries with percentages. Those table shows that Japan is
also the one who gets impact a lot on the economic since Korea is included as a top export and
import countries.
(Table of the export countries with percentage)
(Table of the import countries with percentage)
Fiscal policy
Then what about tax rate in Korea? Is it increasing or decreasing? According to the graph at the
bottom, it shows that the tax rate hasn't changed for 10 years. And the tax rate stays as 10.
President Moon is discussing with the Finance Minister a supplementary budget to combat air
pollution. Earlier this month, the International Monetary Fund warned that the Korean economy
was in trouble and called for a "real" new spending to the government. Bank of Korea Governor
Lee Ju-yeol said on Wednesday he supported the government's fiscal package and that the 10
trillion won fund could have a positive impact on growth. In a Bloomberg survey, most
respondents said the additional budget could be paid with 13.2 trillion won or more from 2018, or
by issuing deficit-covering bonds. Last year, the government spent 433 trillion won, including 3.9
trillion won on job creation. Since the global financial crisis last year, however, South Korea has
had the lowest number of jobs. "It's time for an additional budget because of the economic
slowdown," said Kim Doo-un, economist at KB Securities. Kim said that if the government doesn't
give money immediately, it will cost money. Exports, the main growth engine of South Korea,
have fallen for the fourth consecutive month due to China's economic slowdown and falling
semiconductor prices. The central forecast for Bloomberg said GDP growth would slow to 2.5
percent this year. Graph at the bottom shows that Korea government needs more budget.
Compare initial budget and supplementary budget. In 2013, 2015, 2016 and 2017, they needed
Monetary policy
August 30, 2019. It said the monetary policy board of the Bank of Korea decided today to leave
Now look for the inflation rate for 5 years. Bottom graph is showing inflation rate for 5 years. It is
pretty much changing each year but from 2014 to 2018, inflation rate hasn’t gone below 0 but
after 2018 which is present, it’s getting lower and lower. It is heading to -0.5. According to this
inflation rate, interest rate needs to decrease. Because if the inflation rate is high, it means
country economic is not in a good situation so national bank will increase the interest rate. But for
now, the inflation rate is lower than 0 which is deflation. Value of money will decrease so national
bank will decrease the interest rate.
Conclusion
This is demand and supply graph on currency. It shows that more amount of money equal
less quality of the money. Korea's inflation rate is lower than 0. That means less amount of money
It will be better to buy Korea currency. Because the quality of the money is cheaper.
Imagine there’s $10 USD. And for now it can be 11,000 won. But if the inflation rate increase, it will
be 9,000 won or less. Since Korea inflation rate is low, people can buy more amount of Korea
https://www.bloomberg.com/news/articles/2019-03-25/korea-is-seen-needing-9-billion-ext
ra-budget-to-prop-up-economy
https://www.bok.or.kr/viewer/skin/doc.html?fn=201908301045380211.pdf&rs=/webview/re
sult/E0000627/201908
5) Bajpai, P. (2019, March 12). Emerging Markets: Analyzing South Korea's GDP. Retrieved
from
https://www.investopedia.com/articles/investing/091115/emerging-markets-analyzing-sout
https://www.investopedia.com/articles/insights/122016/9-common-effects-inflation.asp
https://voxeu.org/debates/commentaries/there-optimal-debt-gdp-ratio
8) Kim, C. (2019, August 09). The escalating trade war between South Korea and Japan,
https://www.vox.com/world/2019/8/9/20758025/trade-war-south-korea-japan
https://tradingeconomics.com/south-korea/gdp-per-capita
https://tradingeconomics.com/south-korea/inflation-cpi
11) South Korea National Debt 2017. (2019, March 19). Retrieved from
https://countryeconomy.com/national-debt/south-korea#targetText=In
12) South Korea Sales Tax Rate - VAT. (n.d.). Retrieved from
https://tradingeconomics.com/south-korea/sales-tax-rate#
13) Yoo, C. (2019, September 03). South Korean inflation hits record low, fans case for more
https://www.reuters.com/article/us-southkorea-economy-inflation/south-korean-inflation-hi
ts-record-low-fans-case-for-more-rate-cuts