Posted by: rbbadger | December 25, 2008

The Dismal Science

The Korean won has settled into a nicer ratio versus the dollar.  Reports in the news media say that the won jumped because some Korean government officials may have been seen selling US dollars in exchange for Korean won.  So, on the strength of that rumour, plus the fact that Kookmin Bank sold their 14% stake in ING and convertered much of their takings into Korean won.  So that was a nice Christmas present, I suppose.

The foreign exchange market is a weird creature, but then so are other markets.  So much is based off of confidence and other things.  A couple of months ago, the won jumped in value because officials of the Bank of Korea were seen exchanging dollars for won.  But then, it declined a bit owing to concerns about the state of Korea’s foreign reserves.  Rumour and innuendo are still important in economics!

A major problem with economic forecasting is that you are dealing with human beings.  Human beings have a problem of being more unpredictable than the weather at times.

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