In November 2018, "Sovereign Default's Day" was released in the theatres in Korea. Because of its mindblowing castings featuring many famous actors, the movie instantly gained fans after its trailer's release and had millions of audiences in an instant as it was released. The film dealt with South Korea's former dollar exchange crisis in 1997.
However, Korea is facing the same issue as of 2023, and the government should take action to stop the same problem from happening. In detail, in 1997, the dollar exchange rate skyrocketed because of a structural problem in South Korea's economy and government. This happened because of the government's lack of liquidity, which means that the Korean government needed more foreign currency reserves than its foreign debt.
Therefore, South Korea couldn't make any trade and transactions possible with other countries due to the lack of dollars and foreign currency. This increased the exchange rate exponentially, hitting 1900 KRW per USD. Eventually, the government applied for a bailout from the IMF, causing South Korean citizens to live in pain.
However, this has been an issue recently, as the exchange rate of dollars is increasing slowly. Currently, the exchange rate is 1336 KRW per USD, and the government should prepare for a crisis as no one knows when an emergency will occur. The rise in U.S. interest rates is the cause of the dollar's increasing exchange rate. According to the report, the Federal Reserve claims that the U.S. By choosing to take a "baby step" (a 0.25 percentage point rise in the base rate) at both of the Federal Open Market Committee (FOMC) meetings held in February and March, the Federal Reserve has increased expectations for the pace of tightening.
Although this is not the exact cause as the IMF crisis, we should be aware that this is not an ideal circumstance.
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