Expert: Gina Boykin - 10/12/2008

Question
QUESTION: I am part of the US Army located in South Korea.  I currently live off base and receive a 3,200,000 Won (in dollars, but adjusted every 15 days based on exchange rate) housing allowance.  
I have a equity account of a rental property that we own back in the states that we pay around 8% on.
Currently, the Asian stock market issues (and other issues) are causing the Won to loose tremendous value (lowest in 5 years).  The current rate is almost 1$=1400 Won, 5 Year average is 1$=976 Won.

My question is, should we pull as much cash out (as we can) of our U.S. accounts to take advantage of this major low?

I'm really looking for the actual math figures of what is actually involved more than a final answer.

http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=KRW&submit=Convert

Thank you for your time.

ANSWER: If you believe that the exchange rate will go back to the average, then it would make sense to purchase wons now.  If you use $1 to purchase 1400 wons now, and it does eventually return to the average rate, you will be able to use your 1400 wons to buy back the US dollar and get $1.43 ($1/976 x 1400)  This is a 43 percent return on your money.  I did not take into account any currency exchange fees, but you can get the general idea.

---------- FOLLOW-UP ----------

QUESTION: are there any good/official indicators to guess if the won would stay up or go down?

Are there any official (constantly updated) sources for actual interbank rates USD/KRW?

Answer
www.oanda.com has real-time exchange rates.

As far as the indicators, a great place to go to understand different indicators (which is really the first step) is www.babypips.com.  They have a lot of information, but it will help you determine what type of indicators you plan to review, how they look on the charts, and which ones you should use based on your goals (long or short-term investing).

Once you've done the education, there are many sites that provide these charts.  You can set up a demo or virtual account at one of these sites, and use their charts for free.  Here are some examples of sites that provide free charts:
www.oanda.com
www.optionsxpress.com
www.gftforex.com
www.dailyfx.com/charts/