With the exchange rate for the Korean won recently passing 1,600 won to the dollar, the number of Koreans sending money back home is rapidly increasing. On Feb.24th, the exchange rate at 1,514 won to the dollar reached an 11-year high. Barely a month before, the rate was at 1,374; by the middle of February, it had climbed to 1,405. Since then, it has climbed even higher.
In fact, the exchange rate has almost doubled in the past two years. This is causing some rejoicing among Koreans in the United States, who are sending money home to parents, children, or other relatives, and opening new bank accounts in record numbers. For example, two Korean banks – the Uri America Bank and the Sinhan Bank – report that clients are sending almost twice the amount of money back to Korea compared with last year.
In the case of the Uri America Bank, 5,080 transfers were made to Korea in February, for a total of over $57,000,000. The number of transfers increased only slightly – by less than 10 percent, but the amounts transferred increased by an unbelievable 120 percent, from $26,000,000.
The Sinhan America Bank has seen similar increases in money transfers. In February of 2008, they registered 750 transfers for a total of $8,200,000. This jumped to two-and-a-half times, to 1,700 transfers in February of this year, for a total of $33,400,000, almost a fourfold increase. Last year, the exchange rate to the dollar was 940; now it is almost 1,600.
“We offer two kinds of savings exchange accounts – in Korean won, or other foreign currency, such as the U.S. dollar. Many Koreans now prefer to have Korean Won exchange savings accounts. With such accounts it takes only five hours to transfer funds from one country to another,” said an Uri America Bank staff member.
A Sinhan America Bank employee noted, “Recently, the exchange rate for the Korean Won has soared. We are seeing a threefold increase in money wires back to Korea. Customers are advised to pay close attention to the daily exchange rates, as the exchange rate for transfers and the daily rate differ slightly. Attention must also be paid to differences in quoted rates brought about by differences in time zones.”
There seem to be two reasons why so many Koreans are sending so much money back home. One is the beneficial exchange rate, but the other is a change in attitude. With the current economic situation so dire here, many Koreans are choosing to make investments in Korea and not in markets here.
Mr. Min, a resident of Bayside, Queens, said, while visiting his bank, “The dollar’s value is now very high, so I am sending money to my Korean family. I also plan to open an exchange account.”
Perhaps the only people happy about the exchange rate are the Koreans in America, who are on board with the opportunity to send money back home to relatives or family. Banks in the United States say the rate levels will remain for quite some time, with analysts wondering whether it will ever drop. Banks note that exchange accounts are intended for Green Card holders and American citizens who no longer retain Korean citizenship.
Meanwhile, import and export firms have been suffering greatly because of the exchange rate, with orders being reduced or cancelled due to high prices.
