Korean Exchange Rate

The entire system of Korean exchange rate is filled with some unique problems. The exchange rate of Korean currency heavily depends on the Japan and leads to asymmetrical positioning and transaction between the two currencies because Japan tends to be one of the most important machine tools suppliers for Korea. This tends to evolve a leading competitor in the third financial markets. Apart from it, the entire fundamental concept of financial liberalisation is in tandem with the democratic liberalisation. On the larger issue, it is also related to the varied implications, which might arise if the future unification of the entire Korean peninsula is taken into consideration.
There are several factors which have dominating impact over the policies of Korean exchange rate. Some of the major ones are the financial liberalisation, the conversion rates in between the prices of yen and dollar along with the increase in the cut throat competition created by the Asian countries, which traditionally were of low cost.
The exchange rate of the Korean currency is finalised on the basis of the financial liberalisation and its various effects, the various internal and external targets of the exchange policy. Apart from these, the various fluctuations which have been registered in the exchange basket also serve to be very essential. On the other hand, the analysis of the Korean exchange rate is done on the basis of the trade off which is conducted in between the credibility of the banks, which on one hand are fighting the inflation and on the second hand, they are trading off between the external shocks. Capital mobility is one of the essential aspects which have been brought about by the financial liberalisations. Thus, it's the long run equilibrium between the above mentioned clauses that define the Korean exchange rate