Helpful Resources for Making it Big in Korea
Am I Right In My Understanding of the Expensive Yen and Its Implications for Korea in the Future?
I've been really baffled by the high yen over the years since it would seem to me that a country like Japan that's got a huge government debt and stagnant economy would be seeing its currency fall in value, not rise. It even seems that natural disaster sends the yen value up, too!
I'd really like to hear from others here who know what's going on. My current theory is that this is because of the unbalanced inward/outward foreign investment situation where Japan has invested heavily overseas for decades but relatively little foreign investment is making its way into Japan. This means that the income (or future expectation of such) from the Japanese foreign investments is coming back into the country and pushing up the value of the yen in the process. When natural disaster hits, Japanese insurers have to liquidate their overseas investments and this also pushes the currency higher.
Am I right? Is this the fundamental reason behind the high yen?
If so, then Korea'd better pay attention, don't you think? I was at a presentation this week where it was said that inbound FDI was only $5.3 billion last year but that outgoing FDI hit a whopping $23 billion. This is a long-term trend and if Korea keeps this up, isn't Korea going to find itself in the same boat as Japan eventually?
Or am I all wrong about this?
Replies to This Discussion | 이 토론에 대한 답글들
-
Permalink Reply by Steven S. Bammel on -
Thanks, Ondrej. Yes, the issues are surely more complicated than my initial approach assumes. You've given me a lot to think about. Thanks!
-
-
Permalink Reply by erik tollefson on -
You probably no longer need any clarification, but there are two main reasons the Japanese Yen is a "safety" currency: 1) Because the size of the economy; 2) somewhat related, it is one of the most "liquid" currencies in Asia. Thus, when there is extended volatility in the market, investors rush into the yen because they know they will be able to get in and get out. At this point, the yen's appreciation has little to do with economic fundamentals.
Over the long-term, China's renminbi will assume this role- Korea has intentionally backed away from making its currency more liquid due to the repercussions (loss of ability to control).
-
-
Permalink Reply by stephanemot on -
Hello Steven
As China and the Us leverage artificially low levels for the renminbi and USD, Japan is even more stricken by the weak Won. That's the currency gap that hurts most. The gvt can't at the same time join the party,pour funds into the recovery, and solve its debt nightnare. -
- ‹ Previous | 이전
- 1
- 2
- Next | 다음 ›
Download the KBC Korea Business Library The Best 47 Free Korean Business Resources to Improve Your Results in Korea
(We hate spam just as much as you and guarantee to never sell or give away your email address.)
Function-Oriented Menu
Feedback, ideas, suggestions or questions about KBC? Click here to share your thoughts with KBC Creator Steven Bammel.
© 2012 Created by Steven S. Bammel.
