Wednesday, October 1, 2008

Won Continues to Decline

Today the won has crossed the 1200 to 1 barrier. Our salaries have declined in value nearly 20% since we arrived in Korea one month ago, and even more since we decided to come here. This graph shows how many won it takes to buy a US dollar, over the period that we've been in Korea.

Every time there is bad news from the US markets, the won drops further. On the rare occasion that there is good news, it climbs back up a bit. Whatever happens in the US, I think the won will rebound. The fundamentals of the South Korean economy are sound. If, as John McCain says, American workers are the most productive in the world, Koreans are the hardest working. The average Korean works almost 2,400 hours a year, a full third more than the average American. A comparison of the time children spend studying is even more lopsided.

America is geopolitcally blessed, and South Korea is in a tough spot - no significant natural resources and cut off from Eurasia by North Korea - but the work ethic here will never fail to drive the economy. South Korea is perhaps the only country in the 20th century to have moved from the third-world to first, certainly the only one outside of Europe. If you doubt the resilience of the Korean economy, just look at what happened after the financial crisis and subsequent IMF-imposed disaster of 1997. South Korea will be fine, stronger than ever soon. The question is, will I stay here long enough for the exchange rate to move back in my favor?

1 comment:

Alice said...

Wow, I hope it happens fast Michael! The good news is you have a job, and a decent place to live, a cost of living there that is reasonable, and most especially - Melanie :-).