The Son of Finance of the Great Age

  Chapter 315 The Essence of Exchange Rates

  Corpse vegetarian meal! Absolute vegetarian meal!

Park Xilai has nothing to do about it. Although he has scolded these old **** countless times in his heart, cursing them to reach bliss early and go west, the reality is that these old guys have tenacious vitality like cockroaches. At this moment, Park Hee Rae still had to put on a smiling face.

  No way, each of these white-haired and chicken-skinned old guys has one or several financial groups standing behind them, and they can't move easily. In other words, they are forces placed in the central bank by the consortium to influence or check and balance the implementation of monetary policy. It doesn't matter if you don't understand the laws of economic operation, professional terms, or international economic forms. The people behind them will instruct these old guys what to do according to their interests.

   In name, the Financial Currency Operations Committee is the highest institution of the Bank of Korea. Even the orders issued by President Park Xilai must be passed by this committee before they can be implemented.

  However, this group of old guys is not monolithic. They are vaguely divided into the financial system group and the corporate consortium group. The two sides work together and cooperate tacitly to guide the monetary policy to the side that is most beneficial to them when the economic situation is good. But now that some consortiums are struggling to make ends meet, there is a gap between the two factions, and several quarrels broke out between the two parties.

As Standard & Poor's lowered the rating of the entire Korean company, and financial scandals erupted in some Korean conglomerates, the Korean banking industry doubted the loan repayment ability of these domestic giants. court. Naturally, these old guys who were placed in the Bank of Korea as their agents looked at each other badly.

   It is a bit wrong to say that the financial crisis of some Korean conglomerates is not due to any problems in their own development, but because of the crisis in the Japanese consortium of their investors, which has led to the financial crisis of some Korean companies.

  As production costs in Japan continued to rise, Japanese companies shifted their production bases overseas on a large scale. In addition to several countries in Southeast Asia, neighboring South Korea has also become a region favored by Japanese capital. For example, the well-known Lotte Group was first invested by Japanese capital. It was only after the South Korean side realized its shame that it was brave enough to catch up, and later formed a situation of joint control by both parties.

As Southeast Asia has become the hardest-hit area, it affects the return on investment of Japanese capital, which in turn causes some Japanese companies to fall into financial crisis, which in turn affects the financial status of some Korean companies. This is the connection between regional economies. , it's just that the connection isn't very good.

  As the financial situation of some South Korean companies deteriorates, Korean banks, as representatives of South Korean capital, began to face up to their lending targets. Although the influence of political forces on the direction of lending cannot be underestimated, South Korean capital also has corresponding agents in the House, and the two sides have fought openly and secretly in the House for the current situation.

The Bank of Korea, which was caught in the middle, couldn't stand the pressure in this regard. Under the impetus of Park Hee-rae's predecessor, he abolished the tradition of concurrently serving as the Minister of Finance of South Korea, and changed it to be nominated by the president and approved by the House of Representatives. , Beginning to hire the president of the Bank of Korea every four years.

  Park Hee Rae came to power in this context.

  Because his factional background is not obvious, and he is well-known in the financial system and academia, he was reluctantly accepted by various forces and finally took this position.

Park Hee Rae, who didn't know how he came to the top position at first, wanted to do a big job and leave his name in history since he took the position of President of the Bank of Korea, but soon he discovered that this position can't do whatever he wants, even Even some simple resolutions that conform to the laws of economics are difficult to pass. For example, lowering interest rates was originally a good thing, increasing market liquidity and allowing Korean companies to have more financing possibilities. However, South Korean capital strongly opposed this resolution because it would affect their interests. However, both sides Through a series of games, a compromise was finally reached on this issue.

   During this process, Park Xilai, who originally proposed the draft decision and should be the protagonist of the whole matter, was reduced to a spectator from the beginning to the end, unable to speak at all.

After this game, Park Xilai finally understood that he was just a Bodhisattva placed in a shrine. It seemed that he had a high status and a lot of incense. No real power.

  Pu Xilai really wanted to be a hands-off shopkeeper, so that he would not care about the world and live happily ever after. However, he is very clear that although his status is quite detached, once the South Korean economy is in crisis, the two parties who were fighting happily will immediately turn their guns and target him at the same time. At that time, he will be ruined immediately, even if he has thousands of mouths, it will be difficult to get rid of the charges of dereliction of duty and inaction.

Although it is unlikely that he will be punished from the legal level, the public opinion in the society will definitely make him feel that life is worse than death. The paranoid and stubborn national character of the peninsula nation is fully reflected in this point. Park Hee I dare not even think about it.

   Fortunately, he also knows a little bit of tactics, and understands the principle of fighting against one faction to win over the other. Coupled with the constant advice from those who are close to him, he gradually gained a firm foothold in the Bank of Korea. After several games, the Korean business and banking circles have changed their previous attitude of ignoring him, and turned to wooing him. Between these comings and goings, Park Xilai's voice continued to increase, and he faintly became the representative of a third-party force.

"At present, the Korean won continues to fall. I heard that some representatives of enterprises have called for the Bank of Korea to intervene in the foreign exchange market. We cannot ignore this kind of public opinion!" As soon as the topic of the recent economic situation ended, I just took the lead in talking about other things. An old man with white hair and chicken skin spoke up.

His name is Luo Xuan, and he is a representative of the corporate faction in the Finance and Currency Operation Committee. When he was young, he was the director of a CJ shipping company. Later, he abandoned business and went into politics. Served as the vice chairman of the Financial Currency Operation Committee.

Due to the Asian currency turmoil, the currencies of the entire region have continued to fall. From July to now, the exchange rate of the Korean won to the US dollar has fallen by more than 5%, from the initial level of 900 won to 1 US dollar, and now it is close to 950 US dollars to 1 US dollar. Level.

   This decline was intentional by the Bank of Korea, which allowed the market to decline except for a few limited interventions in July. Because both Park Hee Lai and his predecessor are very clear that if international funds target the Korean currency, it will be difficult for them to stop this large-scale attack.

  Although the fundamentals of the South Korean economy are still relatively good, in recent months, scandals about large domestic conglomerates have been exposed frequently, which has also made South Korea gradually step into the field of vision of international speculators.

  Under such circumstances, Park Hee-rae kept pushing the Korean won down, and made rumors from time to time that the Bank of Korea does not intervene in the foreign exchange market and fully agrees with the current exchange rate of the Korean won.

Originally, this situation was a good thing for South Korean companies. After converting foreign debt into Korean won, it became more (although not much more), and at the same time, Korean exports became more competitive (but also did not increase much), but at least in the general direction, the depreciation of the Korean won is good for Korean companies.

  But this benefit is almost negligible compared to the debt they bear. Due to the large-scale overseas borrowing of South Korean companies, these debts are denominated in US dollars. When the company is in good condition and the exchange rate remains stable, it is easy for them to borrow US dollars from the market to expand production or extend debts. But in the current situation, the cost of such financing, or debt repayment in exchange for rolling over, is becoming increasingly expensive, making South Korean companies uneasy.

  After much deliberation, they attributed the crime to the Bank of Korea's inaction on the exchange rate, so they conspired to launch an attack on this day, and asked Park Hee-lai to order intervention in the foreign exchange market to push up the Korean won.

  Hearing Luo Xuan's words, the corners of Park Xilai's mouth twitched uncontrollably, with a strange look on his face. Other people who knew a little bit about international economics also had a look of uncontrollable laughter. It was obvious that Luo Xuan's words surprised them and felt quite ridiculous.

"how?"

Although Luo Xuan knew nothing about economics, he was proficient at studying people. When he saw that the faces of a few people were not right, he immediately put on a face and said displeasedly: "Isn't this the reason? I am from the Republic of Korea. Citizens want to go on a trip, and the converted dollars are much less, shouldn’t the Korean won be appreciated?”

There is a widely circulated joke in later generations. It is said that an American traveled to China and exchanged 100,000 US dollars for 800,000 RMB. I happily exchanged the 400,000 RMB in my hand for another 100,000 U.S. dollars, and went back to China after playing for nothing.

  The person who wrote this paragraph originally intended to complain about the appreciation of the RMB in Huaxia, but the logical errors in it were almost the same as what Luo Xuan said at this time, and they all exposed the flaws in the understanding of the nature of the exchange rate.

Theoretically speaking, the exchange rate level between two countries is determined by the theory of purchasing power parity, that is, the ratio of the price of the same goods in one country to the price in another country constitutes the currency exchange rate between the two countries. exchange rate level. But in practice, this view exists only in theory. Because there are various factors such as different tax rate systems, consumption levels, and interest rates among countries, there is no equilibrium exchange rate between the price levels of the same commodity.

  Developed to modern times, although the exchange rate level is still based on the theory of purchasing power parity, it is more to balance a country's international trade accounts. It's like in China's international trade, the current account and the capital account have a double "surplus", and funds continue to flow into the mainland of China. This situation will form a strong expectation for the appreciation of the renminbi, even if the Chinese government does not intend to do so. It is willing to appreciate, but under the pressure of various parties, it is necessary to announce the appreciation of the renminbi. Otherwise, countries that are often in a deficit position will not be willing to do business with Huaxia.

  Even if Huaxia has made concessions on the value of the renminbi in later generations, European and American countries often launch trade wars against Huaxia, and the trade surplus and deficit relationship between each other is the root cause.

The current situation that Luo Xuan is talking about is another situation. At present, the currency of the entire region is sluggish, that is, the general environment is not good. South Korea is an export-oriented economy. And Luo Xuan actually asked the central bank to intervene in the foreign exchange market at this time. Don't say that raising the exchange rate in the general environment is tantamount to a dream, but if you really want to intervene in the market, I am afraid that except for the forces behind Luo Xuan, most export companies will Strongly oppose this approach.

   No wonder other people find it incredible!

   Thanks to book friend Niu Xiaofan for voting for monthly support! I hope that more book lovers will like this book, recommend it more, and collect it more. If you can reward, subscribe, and vote monthly, the author will be grateful!

  (end of this chapter)