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Hello everyone,
I don't usually post in the Finance thread, as my knowledge of the workings of the economy is not the best. But I did have a question that I was hoping someone could shed some light on. I've been following the somewhat chaotic markets and I'm a little concerned. Here's why: I am currently working in South Korea to save up some money and pay off bills. I have money to send home and will have much more later on. Do you think I should hold onto it and wait for the dollar to drop further, or should I send it home ASAP? What do you think is going to happen with Asian currencies in relation to the dollar?
From what I've read, the Asian markets tumbled late last week, but were back up again this week. Will the market fluctuations have any effect on the strenght/weakness of the dollar and/or Asian currencies? Looking at the monthly averages of exchange rates for the Korean won, the dollar seems to have strengthened somewhat against it in the past 3 months. This, in turn, gets me less money when I exchange for dollars.
So, I guess my question is: Is it possible that anything drastic will happen in the forseeable future? And if so, what's the best course of action for someone holding a large amount of Asian currency?
OK, so I follow you are a US ex-pat sending money "back" to the US? Or is it that are considered a US citizen just temp residing outside the US for a short-term (less than one year) project? Asking that upfront, because it might make a larger difference on taxes than the money exchange rate.
But towards your concern regarding floating rates between the dollar and won -- Are you at all familiar with any form of "futures" or "options?" Those allow you "lock in" a price as buyer or seller of products long in advance of the actual exchange. What you would be dealing in called the FOREX or foreign exchange markets.
Overall this sort of acts an insurance policy to ensure you as a buyer or seller a certain priice. Typically for 3 to 5% of the total amount to be traded you buy a contract in advance. If the market is turning against your contract, you can let it expire (and lose the 3 to 5% posted). If the market is making your contract more valuable, you can hold until the time of the exchange, or sell it at profit in advance.
I know that it a complicated concept, so we can over it step-by-step if you want or do some background education seach "korean won dollar exchange future" you will find a BUNCH of information in that.
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