Archive for the ‘Currency & Forex’ Category

A forex primer and some good educational videos

Monday, July 29th, 2013

Since I lived in Korea for 12 years, and since those 12 years were pretty much my entire adult life, until recently all my personal wealth was in Korean won (KRW).

While in Korea, I saw the won fluctuate between 900 KRW per 1 US dollar to about 1300 KRW to 1 USD. Obviously if I could consistently buy 1300 won per dollar and then buy dollars for 900 won, I’d make some money. If you’re not quite sure how the Forex market works, these educational Forex videos will take you from the very basics like what is Forex (think exchanging your currency for a foreign one when going on vacation).

The hard part is knowing when to buy and sell. When we were leaving Korea we wanted to turn some won into dollars. The exchange rate was about 1150. We exchanged about 75% of our money into dollars. A few months later, the exchange rate was 1050. We could have had thousands of dollars more had we waited. Now the excahnge rate is 1145. There’s lots of fluctuation here – lots of chances to make money, but also lots of chances to see things go the wrong way.

Now my experience trading currencies has always been with money I have, but, like you can with stocks, you can also trade currencies on margin. There’s a video for that too, in the link above, which explains how trading on margin is similar to buying a home with a mortgage – you use more money than you have in your account. With Forex, that means you can lose more money than you have in your account but you can also increase profits by making bigger trades that you could have otherwise.

In conclusion, the volatility of the currency market means you can do well for yourself – change is opportunity. But the market could always go against you – for example, every time the crazies in North Korea start talking about nuclear missiles, the Korean won suffers and my stress level increases.

Time for South Korea to fight inflation?

Thursday, March 3rd, 2011

Interesting article here on the problem facing South Korea. They prefer a weaker won to drive exports but if they fight inflation at home the won gets stronger.

Is the currency war finally here?

Friday, October 15th, 2010

We’ve known this currency war is coming because it has to. An economy that depends on the whole world selling to US consumers, on credit, while taking America’s jobs and industries can not be sustained. Some people are trying to keep it propped up somehow but it can’t really work out that way, can it?

The way this plays out over the next couple of years is going to be pretty fascinating and will have a huge impact on our prosperity. Do you accept Martin Wolf’s assertion that the US will inevitably win the war by inflating internally through QE? If so at what price does this victory come and how do you invade inflation and high interest rates once the recovery comes?

To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world

South Korean won strenghtening – Bank of Korea getting involved?

Saturday, September 11th, 2010

I brought several tens of thousands of dollars and converted them to won (to get a new apartment) about 6 months ago. The exchange rate was about 1150.

Eventually that money is going back to the US and from Korean won back into greenbacks. It would be nice if the won was around 1100 or 1000 or lower. Several have predicted the BOK intervening because a stronger won makes things tougher for Korea’s export driven economy. I hope they stay out of it. At any rate, the general trend seems to be a strengthening won.

Predictions for gold, stocks, and currencies

Sunday, February 14th, 2010

Interesting article here that predicts gold prices will slide while large gains can be made with certain currencies in Asia. They say go heavy on stocks but from developed rather than emerging markets.

Recent gains for the US dollar

Tuesday, February 9th, 2010

It’s interesting to note that as soon as we see some bad news in Europe, the dollar gains against virtually every currency in the world. The dollar is still considered “safe” (despite the fact that holding onto dollars could have cost you big over the past couple years) because it is the currency backed by the most economic, political, and military power (not necessarily in that order).

This article shows that interest rates (in Korea in this example) effect a currency. Since I’ll be moving US dollars to Korean won for a new apartment in Seoul soon I’m very curious to see what will happen to the won vs. the dollar short term. Obviously I’d like to see the dollar gain…