Question

Where is the currency considered legal tender for the Korean Won? What is the institution that...

Where is the currency considered legal tender for the Korean Won?

What is the institution that issues new currency or controls the supply of the currency for the Korean Won?

What are the factors that drive the demand for this currency on a international stage?

Pick one event where the exchange rate changes significantly (against the dollar), discuss possible causes for the exchange rate to change for the Korean Won.

Homework Answers

Answer #1

Korean won is considered legal tender and is fully convertible across various parts of China, Us And EU. It is available via forex agents as well.

Bank of Korea is central issuer for South korean Won Which prints and regulates supply of currency.

Korean won won witness increased demand if it is in basket of currencies and if it is linked with major commodities like crude oil, steel, aluminium zinc, etc. Also higher interest rates in Korean economy and higher imports can increase its demand.

For ezample if Korea imports crude oil excessively which is oftenly linked to US dollars. Thus this will increase demand for dollars and hence dollar will appreciate causing Korean won to depreciate against dollar under exchange rate mechanism. Rhe possible cause in this is shortage of global oil supply in market which creates demand for oil and hence US Dollars.

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