Currency Uncertainty

This blog post is dedicated to my aunt Judy who I once believed followed the stock market too closely for her own good. Now I think I'm even worse.

A week or so ago, a couple of friends from back home who I hadn't heard from in a while sent me an email on the same day. The impetus: they'd both heard a program on NPR discussing the South Korean economy's historic slump during the current crisis. "Well," I thought, "at least I'm getting some friendly letters out of this."

The South Korean economy has been on the same roller-coaster ride as most of the world. But since I've got steady employment, my rent is taken care of and no health care costs, you'd think I'd be one of the last people affected.

The problem for me is a matter of currency. The South Korean currency (the Won) has been making unpredictable plummets and gains against the U.S. dollar, but mostly plummets. At one point, when those two friends emailed me, the Won was at a 10-year low against the U.S. dollar; an exchange rate unseen in the country since the 1990s Asian financial crisis.

Let me use my monthly salary as an example -- this is how I think about it on a regular basis. I make approximately 1.8 million Won per month. When I first arrived in Korea at the end of summer, that translated to approximately $1700 per month. Today, it only translates to about $1500 and at the lowest point it was only worth about $1250.

Even this horrible exchange rate wouldn't be an issue for the time being if circumstances were a little different. I could I would simply sit on my savings of Won here in the country and wait to exchange them for U.S. dollars when the markets stabilize.

But I've got a number of student loan payments I must make each month in the U.S. Very soon I'll be forced to transfer some of my Won to my Bank of America account, exchange rate be damned.

Most folks I've talked to here expect the markets to settle at the start of the new year with a much better exchange rate. I'm not sure if this is self-delusion or blind optimism, but let's hope they're right.