ABSTRACT
The movement of the exchange rate is one of the most important issues in policy discussions in South Korea today. Exchange rate policy seems to have been considered an independent policy for affecting the current account, which has been one of the main engines of economic growth in South Korea. Whenever its economy has been in recession, many have blamed overvaluation of the Korean won, in turn faulting the monetary authorities for pursuing an inappropriate exchange rate policy. Indeed, similar complaints can be heard today with the present recession taking hold. Firms and politicians alike are renewing their demands for a cheaper won. It is not so clear, however, that exchange rate policy has done anything to reverse the current account deficit or to correct other economic problems. Obviously, this is something which merits closer examination.
