Abstract
The main purpose of this paper is to analyze Korea's past exchange rate experiences and to consider the appropriate exchange rate policy for Korea in the future. The won-$ exchange rate is shown to have been undervalued to improve the trade account and to be affected by Korea's external debt position and the relative prices of Korean goods. Using a framework for adjusting the exchange rate, the effects of a rise in the current account surplus and yen appreciation on the exchange rate and trade balance are estimated. After discussing one possible exchange rate adjustment to reduce the US deficit with Korea, this paper argues that more scope will be given for the exchange rate to be determined by market conditions. This arises from greater complexity and diversification of the economy in terms of the activities and interests of different economic agents expected to prevail in the future.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
