There have been a variety of currencies that have begun going from strength to strength on the foreign stock exchange in recent months. One of the most notable of these is the Korean won. This is primarily being driven by the South Korean government’s substantial investment in the economy.
As a result, the once weak won has become increasingly attractive to many investors. From the outside looking in, the fluctuations in the currency’s price may make it seem as though it might not be a lucrative investment.
Alongside this are the variety of risks that may come with speculating on the currency. As such, many of us may want to find out more about what’s driving the currency’s strength, as well as whether it may be a solid long-term investment.
While there are a variety of podcasts that cover the topic, as well as investing in the overall foreign exchange market, there are a few things that you’ll need to know before investing in the Korean Won.
Are There Any Risks?
There are a few risks associated with investing in Korean money, although many of these are similar to investing in any other currency. However, there are a few that may be somewhat unique to South Korean, each of which may have an impact on its strength on the stock market.
The majority of these focus on geopolitical tensions in the region, with the most notable being South Korea’s relationship with Japan. Japanese technology exports have seen a steady decline over the past few years, which is a trend that has become increasingly more apparent in recent months.
Much of this focuses on high-tech materials, which is something that could hit South Korea harder than many other countries. Despite this, the country has been able to avoid many of the worst aspects of the apparent downturn in tech demand. This is primarily being due to heavy government spending. However, this is something that may be an ongoing issue and could affect the Korean won over time.
Another potential risk is how the ongoing trade war between the United States and China may affect the country. While this is something that has affected the South Korean economy minimally, it may still be of concern to many potential investors.
It should be noted that many investors believe that these risks may not be as large as some people would suggest. The primary reason behind this is the South Korean government’s increasing spend on the economy.
While some data shows that there may have been a contraction in the economy without this expenditure, it might not have been as large as some might believe. As a result, while the overall economy is on somewhat shaky footing, it should be much more stable than many would suggest.
As a result, many reports have suggested that the Korean won will continue on an upward trend in the coming months, which could make it an ideal time to consider investing in the currency.
South Korea’s Won Goes From Strength To Strength
Investors have been flocking to the Korean won in recent months, which is primarily driven by its increasing strength on the market. According to recent reports, the currency has reached a two-year high compared to the United States dollar, with it showing no signs of slowing down.
While there have been a variety of factors that should have negatively affected the currency’s value, the majority of this has been avoided through the South Korean government’s continued investment in the economy.
This has led to the Korean won increasing 12% against the U.S. dollar this year, with the won-US dollar exchange rate hitting a two-year low of 1080 won. There are a few reasons behind this, with many investors dismissing concerns that the South Korean government may artificially weaken its currency.
Alongside this has been that South Korea has quite a notable trade surplus with the United States, which has further enhanced the Won’s strength in recent months. Much of this has led to investors continuing to see the currency as a lucrative proposition, with several reports noting that the won will continue on an upward trend.
This leads to many people wondering how much the South Korean currency is expected to grow and whether it will be a fruitful investment. Should the current trend continue, it has been suggested that it will increase by two percent against the U.S. dollar in the coming year.
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