South Korea has one of the largest economies not only in Asia but around the world as well. So, it is interesting to gather more information about its currency.
People should remember that the Korean won (KRW) is the national currency of the country. Won’s users denote the currency by using the symbol “₩,” as in “₩1,000.” For more than 70 years, the won has been administered by the country’s central bank, the Bank of Korea.
What’s interesting, the local currency is fully convertible and is regularly traded against other currencies, such as the U.S. dollar (USD), the euro (EUR), and the Japanese yen (JPY). One important detail: One won is divided into 100 subunits, called “jeon.”
People, who aren’t familiar with the won or the forex market, in general, might ask, “is forex trading good for beginners?” The answer is pretty simple: Yet, it is.
Won and its past
It is noteworthy that the Korean won has been used in some form for a very long time. However, during the occupation of Korea by Japan, which spanned from 1910 to 1945, it was briefly replaced with the Korean yen.
After World War II, nevertheless, the partition of North Korea and South Korea resulted in two separate currencies, each called the Korean won. Interestingly, initially pegged to the USD at a rate of 15 won to 1 dollar, several devaluations occurred after that due largely to the effects of the Korean War on the local economy.
Another interesting fact: In 1950, the Bank of Korea began operations as the country’s new central bank. The Bank of Korea assumed the duties of the previous monetary authority, the Bank of Joseon, with exclusive authority to issue banknotes as well as coins for South Korea.
Currently, it issues banknotes in denominations ranging from 1,000 to 50,000 won. It is worth mentioning that the notes feature famous figures, including writers Yi Hwang, featured on the 1,000-won note, and King Sejong, who appears on the 10,000-won note.
In the 1980s, the country sought to expand the relevance of the won to international trade by replacing its U.S. dollar peg with a basket of currencies. Interestingly, further changes were made in the late 1990s when the government of South Korea responded to the financial crisis in Asia by allowing the local currency to float freely on foreign exchange markets.
Won and the country’s economy
As stated earlier, South Korea’s economy is one of the largest in Asia and a major force in international commerce. As in the case of many developed economies, South Korea has a massive service sector, comprising about 56% of annual gross domestic product (GDP).
It is also known for its advanced manufacturing sector, which produces high-value products like semiconductors as well as automobiles. Accordingly, the industry is a significant component of the country’s gross domestic product (GDP), contributing about 33% of the total.
Importantly, the value of the won has been relatively stable over the past decade. Inflation in Asia’s one of the largest economies, has declined significantly over the same timeframe.
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