The Impact of Exchange Rate Fluctuations on Korean Industry

December 31, 2018

The stabilization of exchange rate fluctuations is an important economic policy issue for an open, export-oriented country such as South Korea. The 1997 foreign exchange crisis and the 2008 global financial crisis put the Korean foreign exchange market in great turmoil, and the instability of the exchange rate resulting from those crises seriously affected the economy as a whole. In addition, more frequent fluctuations in the value of the Korean won are causing concerns about the negative impact on foreign trade. This uncertainty in the external sector is a very important variable that can influence decision making by industries, companies and various stakeholders. As exchange rate fluctuations drew the attention of economists, they began to study their effects on macroeconomics using time series. However, recently analyses of exchange rate fluctuations have expanded to the firm level using corporate and industrial data.