By Yi Whan-woo With the Korean won bouncing back against the U.S. dollar, there is growing attention to whether the local currency will continue to gain ground against the greenback, on the back of a string of events this week in the United States and China that raise hope for relief from U.S. inflation as well as the dollar's decline. The won has remained at the 1, 400-won level for more than a month, adding to concerns over economic turmoil in Korea, as this level has only been observed twice before: during the 1997-1998 Asian financial crisis and the 2008-2009 global financial crisis. Under these circumstances, the Korean currency gained strength against the greenback for the second trading session, Tuesday. The won-dollar exchange rate ended at 1, 384.9 won, down 16.3 won from a day earlier after opening at 1, 394.5 won and remaining below 1, 400 won throughout the session.
U.S. President Joe Biden, right, shakes hands with Maryland Democratic gubernatorial candidate Wes Moore during a rally for the Democratic Party on the eve of mid-term election day at Bowie State University in Bowie, Maryland, Monday. EPA-Yonhap
Analysts said that the won's ascent can be attributed to the U.S. midterm elections, Tuesday, in which the Republicans could make gains in the House of Representatives. The possible gains could mean a curb on the Joe Biden administration's spending, which ―while strengthening the safety net for low-income groups, pandemic-related support and investments in infrastructure ― has been criticized by Republicans for fanning inflation that reached four-decade high of 9.1 percent in June. U.S. inflation has shown no signs of cooling and has remained above market forecasts, with 8.5 percent in July, 8.3 percent in August and 8.2 percent in September. U.S. inflation in October, which is scheduled to be announced Thursday, is anticipated to slip to 7.9 percent. A 7-percent-range inflation can be perceived as an optimistic sign, a Seoul economist said on condition of anonymity, adding, It may allow the U.S. Federal Reserve to take a breather on its aggressive credit tightening in its next rate-setting meeting. The economist was referring to the Fed's December rate-setting meeting from Dec. 13 to 14, which takes into account the October inflation rate in the decision-making process. The Fed delivered the fourth 75-basis-point hike so far this year, raising the once near-zero base rate to the range of 3.75 percent to 4 percent as of November. While the Fed's rate hike added to the persistently strong dollar, some believe that China could be gearing up to shift away from its zero-COVID policies, so in return, it is drawing the attention of investors who prefer safer haven assets such as the U.S. dollar. The market speculates that the Chinese government will find it tough to maintain its lockdown policies, so that is likely to lead to a fall in the dollar's value, said Kim Seung-hyuk, a researcher at NH Futures.This article is about the official currcy of South Korea. For the official currcy of North Korea (ISO 4217 code KPW), see North Korean won.
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The South Korean won (Symbol: ₩; Code: KRW; Korean: 대한민국 원) is the official currcy of South Korea. A single won is divided into 100 jeon, the monetary subunit. The jeon is no longer used for everyday transactions, and it appears only in foreign exchange rates. The currcy is issued by the Bank of Korea, based in the capital city of Seoul.
The old won was a cognate of the Chinese yuan and Japanese y, which were both derived from the Spanish-American silver dollar. It is derived from the hanja 圓 (원 , won), meaning round, which describes the shape of the silver dollar.
The won was subdivided into 100 jeon (Korean: 전 ; Hanja: 錢 ; MR: chŏn), itself a cognate of the Chinese unit of weight mace and synonymous with money in geral. The currt won (1962 to prest) is writt in hangul only and does not officially have any hanja associated with it.
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The Korean won, Chinese yuan and Japanese y were all derived from the Spanish-American silver dollar, a coin widely used for international trade betwe Asia and the Americas from the 16th to 19th cturies.
During the colonial era under the Japanese (1910–45), the won was replaced by the Korean y which was at par with the Japanese Y.
After World War II ded in 1945, Korea was divided, resulting in two separate currcies, both called won, for the South and the North. Both the Southern won and the Northern won replaced the y at par. The first South Korean won was subdivided into 100 jeon.
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The South Korean won initially had a fixed exchange rate to the U.S. dollar at a rate of 15 won to 1 dollar. A series of devaluations followed, the later ones, in part, due to the Korean War (1950–53). The pegs were:
The first South Korean won was replaced by the hwan on February 15, 1953, at a rate of 1 hwan = 100 won.
In 1946, the Bank of Joseon introduced 10 and 100 won notes. These were followed in 1949 by 5 and 1, 000 won notes.
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And assumed the duties of Bank of Joseon. Notes were introduced (some dated 1949) in dominations of 5, 10 and 50 jeon, and 100 and 1, 000 won. The 500 won notes were introduced in 1952. In 1953, a series of banknotes was issued which, although it gave the dominations in glish in won, were, in fact, the first issues of the hwan.
The won was reintroduced on June 10, 1962, at a rate of 1 won = 10 hwan. It became the sole legal tder on March 22, 1975, with the withdrawal of the last circulating hwan coins. Its ISO 4217 code is KRW. At the reintroduction of the won in 1962, its value was pegged at 125 won = US$1. The following pegs operated betwe 1962 and 1980:
On February 27, 1980, efforts were initiated to lead to a floating exchange rate. The won was finally allowed to float on December 24, 1997, wh an agreemt was signed with the International Monetary Fund.
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Until 1966, 10 and 50 hwan coins, revalued as 1 and 5 won, were the only coins in circulation. New coins, dominated in won, were introduced by the Bank of Korea on August 16, 1966, in dominations of 1, 5 and 10 won, with the 1 won struck in brass and the 5 and 10 won in bronze. These were the first South Korean coins to display the date in the common era, earlier coins having used the Korean caldar. The 10 and 50 hwan coins were demonetized on March 22, 1975.
In 1968, as the intrinsic value of the brass 1 won coin far surpassed its face value, new aluminium 1 won coins were issued to replace them. As an attempt to further reduce currcy production costs, new 5 and 10 won coins were issued in 1970, struck in brass. Cupronickel 100 won coins were also introduced that year, followed by cupronickel 50 won coins in 1972.
In 1982, with inflation and the increasing popularity of vding machines, 500 won coins were introduced on June 12, 1982. In January 1983, with the purpose of standardizing the coinage, a new series of 1, 5, 10, 50, and 100 won coins was issued, using the same layout as the 500 won coins, but conserving the coins' old themes.
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The Bank of Korea announced in early 2006 its inttion to redesign the 10 won coin by the d of that year. With the increasing cost of production, th at 38 won per 10 won coin, and rumors that some people had be melting the coins to make jewelry, the redesign was needed to make the coin more cost-effective to produce.
The new coin is made of copper-coated aluminium with a reduced diameter of 18 mm, and a weight of 1.22 g. Its visual design is the same as the old coin.
The 1 and 5 won coins are rarely in circulation since 1992, and prices of consumer goods are rounded to the nearest 10 won. However, they are still in production, minting limited amounts of these two coins every year, for the Bank of Korea's annual mint sets.
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In 1998, the production costs per coin were: 10 won coins each cost 35 won to produce, 100 won coins cost 58 won, and 500 won coins cost 77 won.
The Bank of Korea designates banknote and coin series in a unique way. Instead of putting those of similar design and issue dates in the same series, it assigns series number X to the Xth design of a giv domination. The series numbers are expressed with Korean letters used in alphabetical order, e.g. 가, 나, 다, 라, 마, 바, 사 . Therefore, ₩1, 000 issued in 1983 is series II (나 ) because it is the second design of all ₩1, 000 designs since the introduction of the South Korean won in 1962.
In 1962, 10 and 50 jeon, 1, 5, 10, 50, 100 and 500 won notes were introduced by the Bank of
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