분야
docx1. Meaning of currency wars
2. Background of currency wars
① Reasons for international devaluation
② Stream of currency wars
II. Example of U.S. and China
1. Current state
2. Cause
3. Problems
III. Influence to Korean economy and response strategy
1. Influence and response to appreciation or depreciation of Yuan
① The background of the recent Yuan appreciation
② The impacts of the Yuan exchange rate fluctuations on Korea
③ The countermeasures to respond to the Yuan exchange rate fluctuations
2. Influence and response to appreciation or depreciation of dollar
① The background of the recent dollar weakness
② The impacts of the dollar exchange rate fluctuations on Korea
③ The countermeasures to respond to the dollar exchange rate fluctuations
3. Influence and response strategy to appreciation or depreciation of Yen
① The background of the recent Yen weakness
② The impacts of the yen exchange rate fluctuations on Korea
③ The countermeasures to respond to the Yen exchange rate fluctuations
4. Influence and response strategy to appreciation or depreciation of Euros
① The background of the recent Euro weakness
② The impacts of the Euro exchange rate fluctuations on Korea
③ The countermeasures to respond to the Euro exchange rate fluctuations
IV. Conclusion
War using the exchange rate policy has been sustainable like Europe’s exchange rate policy in the early 20th century and Japan’s exchange rate policy after World War II. Recently, Economic purposes such as restoring slowdown of economy due to financial crisis and recovery of trade deficit are combined with political purpose and retaliatory currency manipulation in china and U.S. is on the rise. Extreme fluctuations of exchange rate of U.S. and china that account for a large proportion of exports in the export-dependent Korean economy cause Korean company’s sales decreasing and trade frictions in the international trade of Korea. What is worse is that exchange rate frictions occur all around the world as well as between U.S. and China. And also protectionism of exchange rate is current global trend. Therefore, we focus on the negative impact of domestic protective currency manipulation on Korean economy. At first, we will grasp the current situation of currency war between U.S. and China. And then, we will review the impact of exchange rate policy of U.S., China, Japan, Euro countries on Korean economy.
1. Meaning of currency wars
Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. According to Guido Mantega, a global currency war broke out in 2010. This view was echoed by numerous other financial journalists and government officials from around the world. Other senior policy makers and journalists have suggested the phrase "currency war" overstates the extent of hostility, though they agree that a risk of further escalation exists. This subject is very important to Korean economy which the portion of export is large. And recently the appreciation of won makes financial market get confused so KOSPI fell to 1870 line.
2. Background of Currency Wars
① Reasons for intentional devaluation
As the price to buy a particular currency falls so too does the real price of exports from the country. Imports become more expensive too, so domestic industry, and thus employment, receives a boost in demand both at home and abroad. However, the price increase in imports can harm citizens' purchasing power. The policy can also trigger retaliatory action by other countries which in turn can lead to a general decline in international trade, harming all countries.
② Stream of Currency Wars
States engage in competitive devaluation since 2010 have used a mix of policy tools, including direct government intervention, the imposition of capital controls, and, indirectly, quantitative easing. While many countries have experienced undesirable upward pressure on their exchange rates and taken part in the on-going arguments, the most notable dimension has been the rhetorical conflict between the United States and China over the valuation of the Yuan. This which began in the early 21st century is being pursued by opinions among economists have been divided as to whether it will have a net negative effect on the global economy. By April 2011 journalists had begun to report that the currency war had subsided. Some economists however have continued to assert that the conflict is still on-going.
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