logo

Interest Rates in South Korea - Assignment

   

Added on  2020-10-04

11 Pages2614 Words33 Views
In the last ten years, the U.S.and many European countrieshave maintained a low interestrate envi

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Main Body.......................................................................................................................................1CONCLUSION................................................................................................................................4REFERENCES................................................................................................................................5

Illustration IndexIllustration 1: Interest deposits in Korea..........................................................................................3Illustration 2: Interest rates in South Korea.....................................................................................4Illustration 3: Inflation in different countries...................................................................................5

INTRODUCTIONInterest rate is considered as one of the important tool in the monetary policies formed bythe government of a particular country (Bodie, 2013). It helps in assessing various variables suchas, inflation rate, deflation rate, investment and unemployment as well. A significant increase ordecrease in the interest rate have adequate impact on the exchange rates of the currency as well.A comprehensive discussion will be made discussing the importance of interest rate in assessingthe financial position of the country. Further, it will ponder on the trade agreement betweenKorea and US and the statistics of important and exports between the two countries. In the end, adiscussion will be made in brief dotting out the reasons of reduced trade of South Korea with USand European countries (King and Low, 2014) Main BodyInterest rate is considered as a vital factor as it helps in assessing the financial conditionof a particular country. It is dependent on demand and supply of credit. An increase in the supplyof credit tends to decrease the interest rates. However, a decrease in supply of credit will result inincrease of the interest rates for a particular country (Burda and Wyplosz, 2013). Conversely, anincrease in demand of credit will increase the interest rates and a decrease in demand willdecrease the interest rates. (Moravcsik, 2012)The free trade agreement between United States and Korea enforced from March 15,2012 (Karanikolos and et.al., 2013). Total estimation of goods and services which is tradedbetween the two countries are estimated to be $144.6 billion where exports of US were $63.8billion and important happened to be $80.8 billion in 2016. Korea is considered to be 6th largesttrading partner of US where $112.2 billion goods in total were traded in 2016 (US-Korea FreeTrade Agreement, 2017).The foreign direct investment of United States in Korea was $34.6 billion 2015 where theincrease was 3.3% in comparison to that of 2014. It basically invests in Korean manufacturing,finance and insurance companies. Further, Korean foreign direct investment in US amounted to$14 billion in 2014 (US-Korea Free Trade Agreement, 2017). Hence, it can be ascertained thatthere is a large exchange of currency between Korea and United States. Positive net exports of acountry help in its economic growth. However, the interest rates have been reduced in themarket, it has a significant impact on foreign trade (Grubel, 2014). High inflation rates1

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Project Report on Economics - Croatian Economy
|19
|4315
|35

Miracle of the Han River: The Economic Growth of South Korea
|5
|958
|98

Economics and Fiscal Policy: An Analysis of Czech Republic and Germany
|15
|3124
|290

International Business: Market Value of Australian Beef in Korean Markets
|9
|2140
|306

Logistic/Regulatory Project for Solar Panel Import from South Korea to the US
|20
|5222
|483

Trump victory impacts on Malaysian market and their economy Economic impact
|6
|1069
|311