USD KRW Rate

The USD is a major currency, though the pair it forms with the South Korean Won is not a major. This pair tells us how many Korean Won it takes to buy one US Dollar.

The USD

The world’s top currency in every regard, the USD is woven into the very fabric of the global economy.

Interestingly, the roots of the US dollar reach right back to the Spanish Dollar. The first dollar coins issued in around 1792, looked exactly like the Spanish Dollar coins minted in Mexico for instance. For a while, the US dollar and the Spanish Dollar were used side-by-side in the US.

Back then, the USD was obviously not the Federal Reserve-backed global powerhouse that it is today. What’s interesting about the Federal Reserve is that it is in essence a private institution, rather than a property of the state.

Since being taken off the gold standard in 1971, the US dollar has shed a lot of its value. Subject to constant inflation, $1 buys less and less as the global supply of USD overflows.

Currently, there are some $1.7 trillion in global circulation. Most of this supply is actually held outside the US.

Despite the inflation-related woes and the advent of cryptocurrencies, the USD continues to reign supreme, its value stemming from the might of the US economy.

Not only is the US economy the biggest in the world in terms of nominal GDP, it is also the beneficiary of some of the richest and most diverse natural resources on the planet.

The KRW

KRW refers to the South Korean Won. This specification bears repeating, since the currency of North Korea is also called Won. The subdivision of the South Korean Won is the jeon. Currently the jeon is no longer used in the country for everyday transactions.

In its current form, the KRW was introduced in 1962. It became sole legal tender in the country in 1975, and it was turned into a floating currency in 1997, following an agreement with the International Monetary Fund.

Compared to countries such as the US, China and Russia, South Korea may not be big geographically. Economy-wise though, it is safe to say that it punches above its weight. The South Korean economy is the 11th largest in the world and the 4th largest in Asia.

Its performance is more impressive still in light of the fact that until not so long ago, the country used to be one of the poorest in the world.

Responsible for the radical transformation of the South Korean economy within just a couple of generations, was the industrial sector.

USD/KRW Analysis

South Korean monetary policy has an obvious impact on the value of the KRW. The Bank of Korea, the central bank of the country, sets inflation targets over 3-year periods. Its monetary policy is a reflection of these targets.

The Korean economy is heavily reliant on export-oriented manufacturing. Companies like Samsung, Hyundai and LG re all looking abroad to cash in on their efforts.

A massive manufacturing sector is also exposed to the commodity markets.