The Impact of Exchange Rate Fluctuations on Korean Firms and Its Policy Implications

Abstract

Financial liberalization of Korea has expanded the influence of the international financial market on the Korean economy. Monetary policy and financial shocks in major economies give rise to a greater influence on Korean Won exchange rate fluctuation. Korean government requires sophisticated policy responses. Since 2016, the US Treasury Department has designated Korea as one of the exchange rate monitoring list, which potentially increases the downward rigidity of the exchange rate. Thus, it is necessary to analyze the subsequent impacts of exchange rate movements on Korean companies and incorporate them into basic data for policy-making.