What will happen to foreign funds when the economy enters a recession?
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Interview with Ha Geon-hyung, senior researcher at Shinhan Financial Investment
▶ Reporter Ahn Jae-gwang
hello. Today, let’s take a moment to talk about the strong dollar.
The won-dollar exchange rate exceeds 1400 won, and I don’t know how long this exchange rate will continue.
Ha Geon-hyung, senior researcher at Shinhan Financial Investment, will give you a word of help.
hello. nice to meet you I think we should start with the US FOMC meeting.
0.75% points, I went to the Giant Step again.
Isn’t the strong dollar going to keep going?
▶ Ha Geon-hyung, Senior Researcher
First of all, one of the reasons for the current strong dollar is concerns about the Fed tightening.
If tightening appears, at least because the interest rate structure is rising, there is a tendency for money to flow to places where interest rates are high.
A relatively strong dollar inevitably emerges in the region where austerity is expanding.
▶ Reporter Ahn Jae-gwang
The won-dollar exchange rate of 1,400 won has already been broken, so isn’t it possible to go 1500 won and 1600 won?
▶ Ha Geon-hyung, Senior Researcher
I think it’s quite possible.
It’s just that a lot of people don’t talk about the top of the won-dollar exchange rate.
Because the direction is clear. But as far as how far we will go, we are completely open now.
Then where are you going?
I’m seeing this as a matter of time.
Because the reason for the recent rise in the won-dollar exchange rate is that some say that there is a problem in Korea.
In fact, this kind of thinking has an external strong dollar factor, and there is also an internal problem in Korea, and it is complex.
As a result, the stomach is relatively open.
▶ Reporter Ahn Jae-gwang
The government is actively interfering with the exchange rate these days, so they suddenly sell dollars at lunchtime recently.
This kind of thing happens and There have been quite a few cases like this in the past.
But, how about it? Can the government’s proactive measures to defend the exchange rate change the flow of exchange rate appreciation?
▶ Ha Geon-hyung, Senior Researcher
If the government intervenes, there are many thoughts that the exchange rate will stop rising or will it not fall. This role of the government, or the role of the central bank, does not actually change the trend.
If you look at the past, when the exchange rate fluctuates so steeply, it is a common situation to intervene to adjust the speed.
So I don’t think the government will think that their intervention will change the direction of the exchange rate.
If it moves too steeply, it could be households or businesses. There are many people who trade through exchange rates. export companies. or importers.
These parties either lose money if the exchange rate fluctuates too much, or they can’t make their own plans when it comes to planning.
Since there are these problems, in order to prevent them, from the perspective of speed control..
It climbs too steeply rather than taking a direction, so let’s ease it a bit and understand it at this level.
▶ Reporter Ahn Jae-gwang
I’d like to see the dollar strengthen like this someday.
Historically, I wonder how many times and when has the dollar been strong at this level?
▶ Ha Geon-hyung, Senior Researcher
If you only look at the dollar itself, there are about five times.
Once in the 1980s, then in the mid-1990s, and in 2008, 2014-2015. and currently.
In each of these sections, the strong dollar deepened, and there was always something big financial instability.
In the 1980s, there was a foreign exchange crisis in Latin America,
In the 1990s, there was a foreign exchange crisis in East Asia including Korea.
2008 was the year of the global financial crisis.
And between 2014 and 2015, there was the Chinese yuan fluctuation.
As these kinds of financial instability continue to appear, it can be seen that such concerns are bound to arise, whether large-scale financial instability is also appearing in Korea or other regions this time.
▶ Reporter Ahn Jae-gwang
Do you think Korea’s economic crisis can be caused by this strong dollar?
※ For more details, click the video or view it on the YouTube channel ‘Hankyung Korea Market’.
plan Hankyung Korea Market general Seong-Geun Cho, Deputy Director
Progress Reporter Ahn Jae-gwang filming Producer Lee Ha-jin and Park Ji-hye
edit Kim Yun-Hwa PD
produce Korea Economic Daily, Hankyung Digital Lab
By Ahn Jae-gwang, staff reporter ahnjk@hankyung.com