Checking exchange rates is good sense

The first thing I do after school is check exchange rates. Depending on the rate, I decide to withdraw money in my Korean bank account from the ATM, which automatically changes Korean money won to American dollar. I wait until the dollar gets cheap because when it is cheaper, I can get more American money out of same amount of Korean money.

An exchange rate is simply the cost of one form of currency in another form of currency. Why do we need it? Because we use this to buy other country's currency while we are in that country. The law of supply and demand is applied to the exchange rate. If there are more people who want to buy using the American dollar, then the cost of the dollar goes up. All the complex situations such as foreign investment, import and export ratios, inflation, and other economic factors help determine the rate.

Unlike many people think, the increase of the exchange rate is not always good. If the dollar is expensive, that means we can buy more goods from other countries for the same amount of money, which makes importers happy. However, it also makes our products more expensive in other countries, which eventually causes lower sales. So exporters are not happy with it.

These days, American dollars are getting cheaper. Exporters should be happy with this news but the reality is more complex than that because a cheap dollar means that its value is cheaper than before. Dropping values are the results of the bad economy of the U.S. The growing size of the U.S. trade deficit (the difference between the amount the U.S. imports and the amount it can sell to the rest of the world) pays a huge role in this problem. The U.S. is buying more than they are selling. Also, more and more countries like the Euro, the currency for many European countries. Americans need to think seriously about this problem because their dollar, their country, is losing its power.

However, it is good for me, a foreigner, because I can buy more American dollars and be able to spend more. So I will just keep hoping for the exchange rate to drop.

--By Yoha Lee