Is being designated as a currency monitoring country a "yellow card" for the Korean economy? A complete summary of the impact on my stock and exchange rates.
Hello! I'm your financial editor, demystifying difficult economic news in an easy-to-understand way.
In the recent news “South Korea designated (or removed) from US currency monitoring list” Have you ever seen a headline like this? Just hearing the word itself gives off a sense of dread, a sense that our economy is about to be in dire straits.
“Will the exchange rate plummet if this is designated?”, “Will my Samsung Electronics stock be okay?” For those of you who are concerned, today I will explain the true meaning of this term. Points we need to prepare forI will explain it clearly.
1. A country under exchange rate monitoring is, simply put, a "warning letter."
Don't think too hard about it. Let's use a soccer game analogy. ‘Yellow card (warning)’ You can think of it as a state of receiving.
From the American perspective, “"You're profiting by selling too much of your country's goods to us? Are you perhaps deliberately manipulating the exchange rate to devalue your currency to boost exports?"”I suspect that “I will monitor” It was declared.
- Exchange Rate Monitoring List: “I’m suspicious, so I’ll keep a close eye on it.” (Yellow card 🟨)
- Currency Manipulator: “"You fouled. You'll be sanctioned." (Red card 🟥)
In other words, the country under observation is not at the 'exit' level where sanctions are imposed immediately, but is at the 'caution' level where it could suffer disadvantages at any time if it is not careful.
2. What criteria does the US use to ‘take a picture’?
The U.S. Treasury Department issues annual reports twice a year, once in the first half and once in the second half. ‘Exchange Rate Report’ is announced here below 2 out of 3 criteriaIf it falls under any of the following, it becomes a country under observation. (If it falls under all three, it becomes a country under manipulation.)
- Trade surplus with the US: Selling things to America More than $15 billion Did you leave any money? (You made too much money!)
- Current account surplus: Compared to that country's GDP 3% or higher Is it in the black? (It's too black overall!)
- Market intervention: The government is using the dollar in the foreign exchange market to defend the exchange rate. More than 2% of GDP Did you buy it? (Did you intervene artificially?)
💡 Editor's Fact Check: As an export-oriented country, Korea frequently falls under conditions 1 (trade surplus with the US) and 2 (current account surplus). Consequently, it's a frequent visitor, frequently appearing on and off the monitoring list.
3. What happens to my money when I'm designated? (Practical Tips)
The most important thing is the impact it has on our real lives, right?
① Volatility of the won/dollar exchange rate
As US surveillance intensifies, our government becomes less willing to intervene in the foreign exchange market. Typically, when US pressure intensifies, it becomes more difficult to artificially maintain a low won value. Won strengthening (exchange rate falling) You may feel pressured.
② Stock market (especially export stocks)
A falling exchange rate (a rise in the value of the won) could negatively impact export companies that sell goods overseas (automobiles, semiconductors, etc.), as their price competitiveness declines. Conversely, this could be a positive factor for companies that import raw materials or airline stocks.
③ Excessive fear is prohibited.
As I mentioned earlier, Korea has been frequently on this list, indicating that the market has already developed a tolerance. “"Designation as a country under observation = economic crisis"”There is no need to overinterpret and sell stocks. However, If you are investing in a company with a high export ratio, carefully check the exchange rate trend.There is a need to do it.
4. The real information comes from the U.S. Treasury Department.
While Korean media articles are good, the most accurate information is guaranteed by checking the original reports published by the U.S. government. The U.S. Department of the Treasury periodically publishes these reports on its website.
If you want to keep up with global economic trends, it's a good idea to bookmark the official website below.
Official website of the U.S. Treasury Department > ※ Official reports and press releases are published here first.
Conclusion: Surveillance continues, but the skills are real.
Being designated as a country under the currency monitoring list is not a pleasant thing, but paradoxically, it is because of this that our country ‘An export powerhouse that sells well to the US’ This is also evidence of that.
Please don't be too anxious, and use exchange rate fluctuations as an opportunity to check the ratio of your investment portfolio (dollar assets vs. won assets).