South Korea and pre-1945 united
Political sketch
Also known as the Republic of Korea. Independent in a split of Korea on 15 August 1948
Korea has long been the center of struggles for power between China and Japan. The Choson dynasty (also called the Lee
or Yi dynasty) ruled from 1392 until the Japanese annexation of Korea in 1910. For much of that time it paid tribute to
China. In 1592 the Japanese military leader who had just reunified Japan tried to conquer Korea. Japanese forces were
successful on land but the Koreans controlled the seas. China dispatched troops to aid Korea. The Japanese withdrew in
1592, but invaded again in 1597 and withdrew in 1599 after the death of the Japanese monarch in 1598. In 1627 the
Manchu overran northern Korea, withdrawing after Korea granted certain concessions. In 1636 the Manchu captured Seoul.
In 1644 they established the Ch'ing dynasty in China, and Korea paid tribute to them. Like China and Japan, Korea for a
long period purposely isolated itself from contact with the outside. In 1876 Japan forced Korea open to trade with a
squadron of warships. China, worried about Japanese intentions, stationed troops in Korea and obtained a treaty opening
Korea to Chinese commerce. As a counterweight, Korea also signed treaties of commerce with several Western powers. A
modernization movement began. In 1884, modernizing radicals seized power, but were overthrown by Chinese troops after
three days. This led in 1885 to the signing of the Li-Ito Convention, designed to guarantee a Sino-Japanese balance of
power on the Korean peninsula. Slavery was not abolished until 1894, though it had been in decline.
On the heels of a rebellion in Korea in 1894, Japan and China went to war over which country would have Korea in its
sphere of influence. Japan defeated China, and under the Treaty of Shimonoseki in April 1895, China recognized Japanese
hegemony in Korea. In October 1895 Japan engineered the assassination of Korea's queen. During the Russo-Japanese War
(1904-1905) Korea at first declared neutrality, but under Japanese pressure allowed Japan to use its territory for military
operations against Russia. Japan defeated Russia, and by the Treaty of Portsmouth (September 1905), Russia recognized
Japanese hegemony in Korea. In November 1905, Japan forced the Korean emperor to sign a treaty making Korea a
Japanese protectorate. On 29 August 1910 Japan annexed Korea. On 1 March 1919, nationwide anti-Japanese rallies were
held. Japan forcibly repressed protest. Resentment against Japanese rule smoldered and occasionally thereafter broke out in
new protests. In 1931 Japan used Korea as its base to invade Manchuria. After the outbreak of the Sino-Japanese War in
1937 and of the Second World War in the Pacific in December 1941, Japan attempted to obliterate Korea as a nation.
Koreans were forced to worship at Japanese Shinto shrines and even to adopt Japanese-style names, and academic societies
devoted to Korean studies as well as newspapers and magazines published in Korean were banned. Koreans were drafted to
work as Japanese soldiers and laborers.
After Japan ended the Second World War by surrendering on 2 September 1945, Korea was divided into two zones of
occupation. The Union of Soviet Socialist Republics (USSR), which had entered the war against Japan on 8 August 1945,
only a week before the war ended, was given the administration of the country north of the 45th Parallel; the United States
was given the administration of the southern part of the country. The United States did not want a unified communist Korea
and the USSR did not want a united capitalist Korea. On 3 September 1948, the northern zone became the communist
Democratic People's Republic of Korea under the dictatorship of Kim Il Sung. North Korean troops invaded South Korea
on 25 June 1950, beginning the Korean War. United Nations troops, consisting chiefly of U.S. soldiers, came to the aid of
South Korea. Chinese soldiers reinforced the North Korean army, which was also supplied with equipment by the USSR.
After bloody fighting that claimed more than 2.5 million lives and left the division of the country approximately as it had
been before the war, an armistice was signed on 27 July 1953. After the war South Korea rebuilt with U.S. aid. A military
coup occurred in May 1961. In the mid 1960s South Korea began an economic takeoff that made it one of the great
economic success stories of the late 1900s. Korea's economic policy involved extensive government support for large
industrial combines (chaebol). Competitive, democratic elections were first held again in December 1987, and over the next
several years the country cast off the vestiges of military rule. In 1997 South Korea was hit hard by the East Asian financial
crisis, but it rebounded quickly.
Wars since 1500
These apply also to North Korea: Mongol Invasions of Korea, 1231-1241; Japanese Conquest of Korea, 1592-1599;
Manchu Conquest of Korea, 1627; Manchu Invasion of Korea, 1636; Korean Rebellions of 1811-1812; Korean Peasant
Rebellions of 1862; French Incursion into Korea, 1866; U.S. Capture of Kanghwa Island, 1871; Tonghak Uprising, 1894;
Sino-Japanese War of 1894-1895 (Japan conquered Korea); Russo-Japanese War of 1904-1905 (fought by Russia and
Japan in and around Korea); Samil Independence Movement, 1919-1920 (against Japan); Second World War in the Pacific,
1941-1945 (Japan against United States, United Kingdom, Netherlands, China, and allies, including the Union of Soviet
Socialist Republics just before the war ended); Korean Occupation Rebellion, 1946 (against United States); Ysu Rebellion,
1948 (against United States); Korean War, 1950-1953 (North Korea and China, supported by Union of Soviet Socialist
Republics, against South Korea, United States, and allies); Kwanju Massacre, 1980 (of protestors against the military regime).
Convertibility
During the Second World War, French Indochina (Cambodia, Laos, and Vietnam) and Thailand, though occupied by
Japanese troops, did not have Japanese occupation currency; rather, they paid a kind of ransom by creating domestic
currency and giving it to Japan to pay for local expenses. In Burma, Hong Kong, western Indonesia (Sumatra and Java), and
the Philippines, the Yokohama Specie Bank acted as the issuing agent of occupation currency and the de facto central bank.
The Bank of Taiwan had the same capacity in Oceania and eastern Indonesia. The Bank of Japan was made the central bank
for the Greater South East Asia Co-Prosperity Sphere by a Japanese law of July 1942, but Japanese occupation currencies
were not officially all pegged to one another and to the yen until 1943, when the rate was established at 1 Japanese yen = 1
military yen (China) = 1 Burmese rupee = 1 Javanese gulden = Malayan $1 = 1 Philippine peso = 1 Thai baht = 2 Japanese
Oceanic shillings, and 1 Indochinese piastre = 0.976 Japanese yen (Bányai 1974: 8). On 1 April 1942, Japan opened the
Southern Development Bank (Nampo Kaihatsu Kinko), which had its headquarters in Tokyo and, from 1 July 1942, a
primary regional office in Singapore (renamed Shonan by the Japanese). The Southern Development Bank became the
official central bank of the Japanese occupation at various dates in 1943 and 1944 for Malaysia, Indonesia, the Philippines,
and Singapore, but this was mainly an administrative change. Notes continued to be printed with the same appearance and
the Yokohama Specie Bank and Bank of Taiwan continued as the agents for issuing occupation currency and regulating
other banks. Although these currencies were part of a currency zone based on the Japanese yen, convertibility between any
pair of currencies was restricted. Taiwan, Korea, and Manchuria were also parts of the Japanese yen currency zone through
their older pegs to the yen.
South Korea established exchange controls on 15 August 1948,when it became independent. It removed most restrictions 1
January 2001.
Other
Defaults on or restructurings of debt to the foreign private sector: None.
Banking crises: A premodern financial crisis in 1872 as a result of government-created inflation (no banks existed at the
time); problems in mid 1980s, as nonperforming loans reached 7% of total by 1986; banks accounting for almost 20% of
assets nationalized or closed 1997-past 1999 (related to East Asian currency crisis).
Frankel and Rose (1996) list of currency crashes: None; but East Asian currency crisis, 1997-1998.
No data for united Korea or North Korea in Reinhart and Rogoff (2002).
References
Primary sources: See the publications of the monetary authorities, and the laws listed in the "Legal basis" column.
Main secondary sources: Bank of Korea (1994, 2000), Cole and Park (1983), Daiichi Gink (1909), Palais (1974).
Monetary authorities: united Korea (to 14 August 1945)
Dates |
Type |
Name |
Legal basis |
Remarks |
1279?
-1368? |
government issue |
Chinese Yüan dynasty
(headquarters Dadu
[also called
Khanbalik--now
Peking], China) |
|
During the period of
the Mongol conquest of
China and Korea, paper
money of the Yüan
dynasty circulated. The
first coins were issued
in 996. |
1368?
-1390 |
used cloth and grain as
money |
government of Korea
(headquarters Gaesong
[or Kaesong], [now
North] Korea) |
|
Apparently notes
ceased to circulate
when the Yüan dynasty
came to an end in
China. |
1390
-1392 |
government issue |
government of Korea
(headquarters Gaesong
[or Kaesong], [now
North] Korea) |
|
The Kory dynasty
issued notes toward the
end of its existence. |
1392
-April 1401 |
coins only |
government of Korea
(headquarters Seoul,
[now South] Korea) |
|
The Kory dynasty fell
from power and
issuance of paper
money ceased. |
April 1401
-1403 |
government issue |
government of Korea
(headquarters Seoul,
[now South] Korea) |
|
Notes were in limited
use. |
1403
-1410 |
used cloth and grain as
money |
government of Korea
(headquarters Seoul,
[now South] Korea) |
|
There was a fall in the
value of paper money
and of cloth (which
was widely used as
money), and people
lost faith in them. |
1410
-1537 |
government issue |
government of Korea
(headquarters Seoul,
[now South] Korea) |
|
Notes were in limited
use. There may have
been episodes during
this period when notes
ceased to be used, such
as starting in 1425;
however, the record
seems unclear. |
1537
-1620 |
used cloth and grain as
money |
government of Korea
(headquarters Seoul,
[now South] Korea) |
|
Palais (1975: 161) says
paper money probably
went out of circulation
sometime around 1537,
when a law provided
for payment of cloth
instead of paper money
for military taxes. The
monetary history of this
period seems sketchy,
and there may have
been periods when
coins rather than cloth
and grain were widely
used. |
1620
-19 May 1902 |
coins only (see
Remarks concerning
free banking around
1900) |
government of Korea
(headquarters Seoul,
[now South] Korea) |
Korea, military cloth
receipt law (kunjok
sup'obp), 1537 |
Palais (1975: 161) says
paper money probably
went out of circulation
sometime around 1537,
when a law provided
for payment of cloth
instead of paper money
for military taxes. In
1867 the government
briefly issued
high-value token coins.
First modern bank
Dai-Ichi Ginko
(Daiichi Gink)
(headquarters Tokyo,
Japan), in Pusan, 1878.
The bank issued
custom house notes in
treaty ports for the
Korean government
starting 1884. Second
modern bank Dai
Juhachi Ginko
(meaning Eighteenth
Bank, headquarters
Nagasaki, Japan), in
Pusan, sometime in this
period. Around 1900
there were also some
private issues of paper
money, but these do
not seem to have been
extensive enough to
qualify as an episode of
free banking. |
20 May 1902
-9 November 1909 |
private monopoly issue |
Dai-Ichi Ginko (Daiichi
Gink) (headquarters
Tokyo, Japan) |
Japan, Ministry of
Finance, granted
approval sometime in
1901 or early 1902 for
note issue |
The Japanese bank
Dai-Ichi Ginko was
given a monopoly
during a period of
increasing Japanese
influence in Korea. In
January 1905 its notes
were recognized as
legal tender (related
legislation was Japan,
Ordinance No. 73,
March 1905). |
10 November 1909
-14 August 1945 |
central bank (with
commercial banking
functions) |
Han'guk Unhaeng?
(Bank of Korea) /
Han'guk Chosun or
Chosen Ginko (Bank of
Chosun, or Chosen, or
Korea, or Khankuku)
from 1 August 1911
(headquarters for both
Seoul, Korea) |
Emperor of Korea and
Japanese Resident
General, Agreement on
the Establishment of a
Korean Central Bank,
July 1909; Japan, Bank
of Chosun [or Chosen
or Korea] Act, 1
August 1911 |
Korea received its own
central bank, which
took over the
government business of
Dai-Ichi Kangyo Bank.
The statute of bank was
revised later as
Japanese control of the
country became
complete. Chosun was
the name for what
foreigners now call
Korea; it was the name
of the country during
the Lee (Yi) dynasty
(1392-1910). |
Monetary authorities: South Korea
Dates |
Type |
Name |
Legal basis |
Remarks |
15 August 1945
-11 June 1950 |
central bank (with
commercial banking
functions) (as part of
currency union to 5
December 1947) |
Han'guk Chosun (Bank
of Chosun, or Chosen,
or Korea) (headquarters
Seoul, Korea) |
Japan, Bank of Chosun
[or Chosen] Act, 1
August 1911 |
The Bank of Chosun
continued to operate
after Japan's surrender
and withdrawal from
Korea following the
Second World War. On
6 December 1947,
North Korea
established a central
bank and national
currency separate from
those of South Korea. |
12 June 1950
-present |
central bank |
Han'guk Unhaeng
(Bank of Korea)
(headquarters Seoul,
South Korea) |
Republic of Korea,
Bank of Korea Act, No.
138m 5 May 1950 |
The commercial
banking functions of
the Bank of Chosun
were spun off and
merged with the
Mutual Aid Bank into
the Bank of Commerce
and Industry
(headquarters Seoul,
South Korea). South
Korea joined the IMF
on 26 August 1955. |
Exchange rate arrangements: united Korea (to 14 August 1945)
Special remark: I have relied mainly on Palais (1974) for an account of Korea's exchange rate history before 1900. Some
parts of that history remain murky. I welcome comments from knowledgeable readers.
Dates |
Arrangement |
Legal basis |
Remarks |
996
-early 1000s |
iron "cash" coins |
|
The government minted iron
"cash" coins and prohibited
use of hemp cloth as a
medium of exchange. The
prohibition proved
unworkable and Koreans
were allowed to continue
using cloth and grain as
media of exchange in market
transactions. |
early 1000s
-1097 |
used cloth and grain |
|
Coins seem to have fallen
into disuse. |
1097
-early 1100s |
silver "jar money" (unbyng) |
|
The government revived
metallic currency, and issued
copper cash coins minted in
1102. |
early 1100s
-1279? |
used cloth and grain |
|
Korea reverted to cloth and
grain as the main media of
exchange. |
1279?
-1368? |
clean? float |
|
A period of paper money
issued by Yüan dynasty after
the Mongol conquest of
Korea. |
1368?
-1390 |
used cloth and grain |
|
Apparently notes ceased to
circulate when the Yüan
dynasty came to an end in
China. |
1390
-1392 |
clean? float |
|
The Kory dynasty issued
government notes toward the
end of its existence. |
1392
-April 1401 |
used cloth and grain |
|
The Kory dynasty fell from
power and issuance of paper
money ceased. |
April 1401
-1403 |
clean? float |
|
Government notes were in
limited use. |
1403
-1410 |
used cloth and grain |
|
There was a fall in the value
of paper money and of cloth
(which was widely used as
money), and people lost faith
in them. |
1410
-1537 |
clean? float |
|
Notes were in limited use.
There may have been
episodes during this period
when notes ceased to be used,
such as starting in 1425;
however, the record seems
unclear. |
1537
-1620 |
used cloth and grain |
|
Palais (1975: 161) says paper
money probably went out of
circulation sometime around
1537, when a law provided
for payment of cloth instead
of paper money for military
taxes. The monetary history
of this period seems sketchy,
and there may have been
periods when coins rather
than cloth and grain were
widely used. |
1620
-1627 |
used copper cash and silver |
|
The government established a
rigid exchange rate of copper
in terms of silver at the start
of this period. in 1620.
Copper cash was minted
starting in 1625 and then,
with interruptions, frequently
afterwards. |
1627
-1633? |
used cloth and grain |
|
The first Manchu invasion of
Korea resulted in a
suspension of the use of
metallic currency. |
1633
-1636 |
copper cash and silver |
|
In 1633, the government for
the first time issued a copper
coin with the inscription
"ever-normal circulating
treasure." |
1636
-by 1640s |
used cloth and grain |
|
The second Manchu invasion
resulted in a suspension of
the use of metallic currency. |
by 1640s
-1656 |
copper cash and silver |
|
Resumed use of coins. |
1656
-1660s |
used cloth and grain |
Korea, royal order of 1656 |
The king issued an order
prohibiting the use of copper
cash. Landowning aristocrats
viewed coins and wealth
gained in merchant activities
as a threat to their social
status. |
1660s
-1678 |
copper cash and silver |
|
Minting by the government
resumed. Private parties also
minted coins. |
1678
-1678 or 1679 |
hard peg; 400 copper mun = 1
silver yang |
|
The government set a ratio
between copper cash and
silver. The official rate
overvalued copper mun
(cash) coins. |
1678 or 1679
-1680 |
hard peg; 200 copper mun = 1
silver yang |
|
The government revalued
copper cash. The market rate,
however, was 800 copper
mun = 1 silver yang. |
1680
-14 January 1867 |
used copper cash and silver |
|
The government abandoned
attempts to set exchange rate
for cash in terms of silver. In
the 1700s, copper cash
became the main medium of
exchange, and silver was held
mainly as a reserve currency.
From the early 1700s to the
early 1800s, the weight of
copper coins was reduced by
about 50%. In 1731, the
government minted a large
issue of cash coins and Korea
in effect adopted monetary
exchange irrevocably, despite
the misgivings of some rulers
and other influential people.
In 1751, the minting of coins
changed from an irregular to
an annual activity. In 1825,
1829, and 1830 the metallic
value of cash coins was 92%,
73%, and 73%, respectively,
of its legal tender value.
Private mints, which existed
with royal permission, were
forbidden in 1864. The
historical information on this
period in Palais (1974) is
limited. |
15 January 1867
-1869 |
clean? float |
Korea, declaration of state
council, 7 January 1867 |
Circulation of 100-cash coins
began 15 January 1867 and
the coins were minted until
16 June 1867. The metallic
value of these coins was only
5-7% of their legal tender
value, a rare instance of a
high-value token coin. An
inflation of 400-500%
resulted. The 100-cash coin
was withdrawn from
circulation in 1869, as a
result of a royal edict
apparently of the 10thlunar
month of 1868. |
1869
-21 January 1874 |
used Chinese and local
copper cash, and silver |
|
After the episode of the
100-cash coins, Chinese cash,
having a metallic value of
half of Korean cash, was
imported and passed as equal
to Korean cash. The Korean
government imported some
of the Chinese cash coins.
The result was an inflation in
the 1870s. |
22 January 1874
-20 May 1905 |
used local copper cash and
silver |
|
A royal edict of 22 January
1874 ordered Koreans to
cease using Chinese cash as a
way of combating inflation.
Because Chinese cash was a
large percentage of currency
in circulation and of
government treasury reserves,
the edict created a recession.
The first modern decimal
coins were issued in 1882. |
1 June 1905
-15 September 1917 |
hard peg; 1 Korean won =
0.75g gold = 1 Japanese yen |
Korea, imperial edict of 1905 |
Korea adopted a gold
standard on the
recommendation of the
Japanese financial advisor.
Japan was on the gold
standard. The Korean word
"won" is based on the same
Chinese character as the word
for (Japanese) yen, meaning
"circle." |
16 September 1917
-14 August 1945 |
hard peg; 1 Korean won = 1
Japanese yen |
|
Japan abandoned the gold
standard during the First
World War; Korea, as its
colony, followed. From my
sources, it is unclear whether
Korea re-established a direct
link between the Korean won
and gold when Japan later
returned to the gold standard,
or whether Korea was
henceforth on a pure
Japanese yen exchange
standard. |
Exchange rate arrangements: South Korea
Dates |
Arrangement |
Legal basis |
Remarks |
15 August 1945
-October 1945 |
hard peg (as part of currency
union); 1 Korean won = 1
Japanese yen |
|
South Korea remained under
Japanese control for a short
period after Japan
surrendered to end the
Second World War. |
October 1945
-14 July 1947 |
hard peg (as part of currency
union); 15 South Korean won
= US$1 |
|
Switched to the US dollar as
the anchor currency at the
prevailing official cross rate.
RR: De facto band of +/-5%
around US dollar. Parallel
market premium reached
2,400% in 1947. |
15 July 1947
-30 September 1948 |
hard peg (as part of currency
union to 5 December 1947);
50 South Korean won = US$1 |
|
Devalued. On 6 December
1947, North Korea
established a central bank and
national currency separate
from those of South Korea.
RR: De facto band of +/-5%
around US dollar. |
1 October 1948
-13 June 1949 |
hard peg; 450 South Korean
won = US$1 |
|
A large devaluation.
RR: Freely falling / de facto
band of +/-5% around US
dollar / parallel market from
December 1948. |
14 June 1949
-30 April 1950 |
hard peg, dual rate; 450 South
Korean won = US$1 |
|
Established a second rate of
900 South Korean won =
US$1 for nongovernment
transactions.
RR: Freely falling / de facto
band of +/-5% around US
dollar / parallel market. |
1 May 1950
-31 October 1950 |
hard peg; 1,800 South Korean
won = US$1 |
|
Devalued and reunified
exchange rate.
RR: Freely falling / de facto
band of +/-5% around US
dollar / parallel market |
1 November 1950
-31 March 1951 |
hard peg; 2,500 South Korean
won = US$1 |
|
First devaluation of Korean
War.
RR: Freely falling / de facto
band of +/-5% around US
dollar / parallel market |
1 April 1951
-14 February 1953 |
hard peg; 6,000 South Korean
won = US$1 |
|
Another wartime devaluation.
RR: Freely falling / de facto
band of +/-5% around US
dollar / parallel market |
15 February 1953
-14 December 1953 |
hard peg; 60 South Korean
hwan =US$1 |
|
Established a new currency at
1 South Korean hwan = 100
South Korean won.
RR: De facto crawling band
of +/-2% around US dollar /
parallel market. |
15 December 1953
-October 1954 |
hard peg; 180 South Korean
hwan = US$1 |
|
Devalued again half a year
after the end of the Korean
War.
RR: De facto crawling band
of +/-2% around US dollar. |
October 1954
-14 August 1955 |
hard peg, dual rate; official
rate 180 South Korean hwan
= US$1 |
|
Established a dual exchange
rate. IMF data start here.
RR: De facto crawling band
of +/-2% around US dollar to
December 1954. From
January 1955, freely falling /
de facto crawling band of
+/-2% around US dollar.
Parallel market premium
around 350%. |
15 August 1955
-30 April 1957 |
hard peg, multiple rates;
official rate 500 South
Korean hwan = US$1 |
|
Devalued and introduced
multiple rates. However, the
official rate applied to all
transactions other than
certain US aid items. South
Korea never registered a gold
parity with the IMF.
RR: Freely falling / de facto
crawling band of +/-2%
around US dollar to
December 1955. From
January 1956, de facto
crawling band of +/-2%
around US dollar. Parallel
market premium above
100%. |
1 May 1957
-27 August 1958 |
hard peg; 500 South Korean
hwan = US$1 |
|
Replaced multiple exchange
rates with a sale of
government bonds. |
28 August 1958
-22 February 1960 |
hard peg, multiple rates;
official rate 500 South
Korean hwan = US$1 |
|
Replaced the bond auction
with an exchange tax of 150
South Korean hwan per US
dollar plus other, varying
taxes reflecting the auction
rate of the US dollar. |
23 February 1960
-31 December 1960 |
hard peg, multiple rates;
official rate 650 South
Korean hwan = US$1 |
Republic of Korea, Monetary
Board, decision of 22
February 1960 |
Devalued.
RR: De facto crawling band
of +/-2% around US dollar.
Parallel market premium
ranged from 20-120%
through 1965. |
1 January 1961
-1 February 1961 |
hard peg; 1,000 South Korean
hwan = US$1 |
Republic of Korea, Monetary
Board, decision of December
1960 |
Devalued and unified the
exchange rate.
RR: De facto crawling band
of +/-2% around US dollar.
Parallel market premium
ranged from 20-120%
through 1965. |
2 February 1961
-9 June 1962 |
soft peg, dual rate; base rate
1,250 South Korean hwan =
US$1 |
|
To the base rate there was
added a varying premium,
initially 20 South Korean
hwan per US dollar.
RR: De facto crawling band
of +/-2% around US dollar.
Parallel market premium
ranged from 20-120%
through 1965. |
10 June 1962
-2 May 1964 |
soft peg, dual rate; base rate
125 South Korean won =
US$1 |
Republic of Korea,
emergency currency
measures, 9 June 1962 |
Introduced a new currency at
1 South Korean won = 10
South Korean hwan. There
was no currency confiscation,
but there was a temporary
freeze of deposits.
RR: De facto crawling band
of +/-2% around US dollar.
Parallel market premium
ranged from 20-120%
through 1965. |
3 May 1964
-18 December 1964 |
hard peg; 255 South Korean
won = US$1 |
|
Simplified the exchange rate.
The parallel rate was in
practice inoperative.
RR: Crawling band of +/-5%
to US dollar. Parallel market
premiums mostly in single
digits. |
19 December 1964
-21 March 1965 |
soft peg, multiple rates; floor
255 South Korean won =
US$1 |
|
Introduced export subsidies
of 3-25 South Korean won
per US dollar.
RR: Crawling band of +/-5%
to US dollar. Parallel market
premiums mostly in single
digits. |
22 March 1965
-2 August 1972 |
managed float, dual rate; floor
255 South Korean won =
US$1 |
|
Abolished export subsidies
and replaced them with
foreign exchange certificates.
This period included an
abrupt depreciation in the
exchange rate on 26 June
1971, from 328.25 South
Korean won = US$1 to
370.80 South Korean won =
US$1. Gold convertibility for
all countries ended in practice
when the United States
abandoned the gold standard
on 15 August 1971.
RR: Crawling band of +/-5%
to US dollar. Parallel market
premiums mostly in single
digits. |
3 August 1972
-6 December 1974 |
hard peg; 400 South Korean
won = US$1 |
Republic of Korea, President,
Emergency Decree for
Economic Stability and
Growth 3 August 1972 |
Devalued.
RR: To April 1974, crawling
band of +/-5% to US dollar.
Parallel market premiums
mostly in single digits. From
May 1974, pegged to US
dollar. |
7 December 1974
-11 January 1980 |
hard peg; floor 480 South
Korean won = US$1 |
|
The market rate changed
from 399 South Korean won
= US$1 to 484 South Korean
won = US$1. |
12 January 1980
-26 February 1980 |
hard peg; 580 South Korean
won = US$1 |
|
Devalued the "base rate"
(also called the standard
concentration rate) from its
previous value of 484 South
Korean won = US$1.
RR: Parallel market premium
rose to 28% in February
1980. |
27 February 1980
-1 March 1990 |
basket (loose) |
|
Switched to a basket as part
of the policy mix determining
the exchange rate. On 1
September 1989, banks were
allowed to set their bid and
ask rates for US dollar within
+/-0.4% of the Bank of
Korea's rate, whereas before
they had been required to set
their rates at the edges of the
+/-0.4% spread, thus
permitting no real
competition (Republic of
Korea, government
announcement of 1
September 1989).
RR: De facto crawling peg to
US dollar (apparently; there
is either a typographical error
or a gap in coverage here
after July 1980). |
2 March 1990
-15 December 1997 |
crawling peg to US dollar
(IMF: managed float) |
Republic of Korea,
government announcement of
1 September 1989 |
Introduced a "market average
exchange system" allowing
fluctuations of up to +/-0.4%
versus the previous day's
weighted average exchange
rate with the US dollar.
Widened the daily
permissible fluctuation to
+/-0.6% 2 September 1991,
+/-0.8% 1 July 1992, +/-1% 1
October 1993, +/-1.5% 1
November 1994, +/-2.25% 1
December 1995, and +/-10%
20 November 1997 (during
the East Asian currency
crisis).
RR: Crawling band around
US dollar to 30 October
1994. De facto drawling peg
to US dollar from 1
November 1994. |
16 December 1997
-present |
managed float (IMF:
independent float) |
Republic of Korea, Letter of
Intent with International
Monetary Fund, 24 December
1997 |
Floated during the East Asian
currency crisis after a
speculative attack on the
currency. Although the
agreement with the IMF was
not signed until 24 December
1997, the South Korean
government had already
agreed to elements of it
earlier, including a floating
exchange rate.
RR: Freely falling to June
1998. Freely floating July
1998-December 2001, when
data end. |
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