Tuesday, September 9, 2008

Won Gains Over 6% in 5 Days

Since I last posted about the won-dollar exchange rate - on Friday - the won has gained over 6% on the dollar. Incredible. And this over the period the massive bailout of Fannie Mae and Freddie Mac was announced. I would think that would strengthen the dollar and cause the won to slide further, but clearly I don't understand. If anyone can explain this to me, I'd love to get it. Otherwise, I'll just sit happy with the 6% raise I got this weekend. ;^>


Andrew said...

voodoo economics? all the conservative, "let the market play itself out", laissez-faire, people who want the government to stay out of business affairs, are thrilled with the bail-out of Fannie and Freddie...wall street surged back Monday. why the won likes, who knows. maybe it's cooked in garlic!

Michael Levy said...

I think it's because so much of the South Korean reserve is in dollars... I'm beginning to wonder who gets hurt the most by a devaluation of the dollar... it's terrible for these East Asian countries that hold so many dollars in reserve and it's good for manufacturers in the US that are exporting, because their products become cheaper on the international market.

On a related note, my next research project is oil and dollar. Oil has always been traded on the dollar, and oil is, in some ways, the reserve for the currency, as gold used to be. Apparently there was some talk of Iraq selling oil on the Euro just before we invaded, and that may have caused a sharp decline in the dollar's value. I'm going to look into that more. Venezuela either is or wants to do the same thing. Craziness with Venezuela and Bolivia, eh? Does anyone else get the feeling, with that and with Russia/Georgia and Iran, that somebody's pushing for a war?