The Korean Won has improved its exchange rate against the greenback today, after both the South Korean and U.S. governments discussed then signed a $30-billion currency swap between the Bank of Korea and the United States Federal Reserve. 

What this means for Americans, or anyone wanting to convert Won to the Dollar, is that the steep decline (35-percent this year) has been stopped.   It was only last week when English teachers were feeling at a loss for words over their monetary demotion, and Koreans abroad were at the crossroads of staying or returning home. 

Outside a Coffee Bean in Sinchon Thursday evening, the news was welcomed by English instructors like Sandra Tilli, who said dryly: “the best thing the Korean and American governments have done together since, like 1953.”

As of close of market today, the Won surged upward, climbing back to previous year norms at 1200 Won to the Dollar.  The climb was newsworthy as it spiked a record 177 Won in single day trading, the biggest since December 26, 1997.

While the media and Lee Myung Bak administration are optimistic that this deal has steered South Korea away from a 1997-8 style financial meltdown, no one really knows what may happen next.  Still others urge caution as the current swap is only temporary and will expire one year from now on April 30, 2009.   Says June Park, an analyst with Woori Securities, in this Korea Times piece:

[But experts warn against any euphoria because the swap deal is not a panacea, which can deal with all lingering problems in the sagging economy.

In particular, the bilateral arrangement's positive impact on the real economy is expected to be limited. 

"The contract will deal with psychological hysteria in the economy. But it will not help much to deal with every fundamental problem,'' said June Park, an analyst at Woori Securities.

"Liquidity problems will be sure to ease but they are unlikely to be addressed overnight. They will be solved 100 percent only when all fundamental hitches are tackled,'' he said.]

Here are more background articles from the Korea Times and a currency converter from Yahoo Finance.

         Korea, US sign $30-billion currency swap

         KOSPI, Won surge on swap deal

         Currency Converter (Yahoo Finance)

Is now the time for everyone to send money back home, or are there any optimists who say the Won will trade even better against the Dollar? 

–Editor

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