The Impact of Exchange Rate Fluctuations on Korean Industry

Soo-Dong Kim ()
Additional contact information
Soo-Dong Kim: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr

No 18-17, Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: The stabilization of exchange rate fluctuations is an important economic policy issue for an open, export-oriented country such as South Korea. The 1997 foreign exchange crisis and the 2008 global financial crisis put the Korean foreign exchange market in great turmoil, and the instability of the exchange rate resulting from those crises seriously affected the economy as a whole. In addition, more frequent fluctuations in the value of the Korean won are causing concerns about the negative impact on foreign trade. This uncertainty in the external sector is a very important variable that can influence decision-making by industries, companies and various stakeholders. As exchange rate fluctuations drew the attention of economists, they began to study their effects on macroeconomics using time series. However, recent analyses of exchange rate fluctuations have expanded to the firm level using corporate and industrial data. Meanwhile, major industrialized countries such as the U.S., Japan and the EU are trying to maintain monetary policy in a way that lowers or at least does not raise the value of their currencies for economic stability, economic recovery, and job creation. Many countries that suffer from currency appreciation and a current account deficit have been intervening in the foreign exchange market somewhat aggressively. And the debate about the legitimacy of these measures is intensifying. Countries around the world have engaged in a competition do devalue their currencies, and this trend is expected to accelerate amid creeping protectionism. For these reasons, the appreciation of the won is likely to persist over the long term, and concerns over the negative impact of this trend are also growing. This study explores the effect of exchange rates on the profitability of Korean companies and industries assuming the continued appreciation of the won.

Keywords: exchange rates; foreign exchange; FX; FX markets; foreign exchange markets; FX policy; foreign exchange policy; exports; export policy; monetary policy; currency manipulation; international relations; global trade; trade protectionism; Japan; US; Korea (search for similar items in EconPapers)
JEL-codes: E52 F31 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2018-10-31
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4199849 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:kieter:2018_017

Access Statistics for this paper

More papers in Industrial Economic Review from Korea Institute for Industrial Economics and Trade Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea. Contact information at EDIRC.
Bibliographic data for series maintained by Aaron Crossen ().