Keeping it in the Bank: Waiting out the Dollar's Downward Tumble

The U.S. economy has been center-stage in discussions with my staff over this past week, as the tumbling stock market and the fallout of large companies going bust have ranked on the front-page headlines in Korea's major newspaper. The almighty U.S. dollar has a strong global impact, as I am learning first-hand from my humble post in this small-ish, export-driven Asian country.

A conversation with my dad several days ago clued me in that several big-name U.S. corporations were floundering -- and going bankrupt, all of which only perpetuates the state of fear and economic concern that propels recession and market instability. It is extremely disconcerting to learn that high-profile companies who have been around for decades have suddenly vaporized with the most recent of market tumbles. When such disaster looms for the "big guys," you start to worry about how its effects are going to trickle down to you. Because sooner or later, they will. Even if you're living across the pond in Korea.

Before coming to Korea this past summer, I studied conversion tables, trying to get a handle on the rate of exchange between the U.S. dollar and the Korean Won. The dollar was worth roughly 1,000 won, give or take, although during the early part of 2008, it was a very favorable 970K - 980K won to the dollar.

During the past three months that I've been living overseas, the value of the dollar has declined noticeably, enough that I've decided to hold off on money transfers back to the States in hopes that it will pick back up again. Certainly money wasn't the only reason I chose to come to Korea, but the opportunity to save a healthy chunk of change was definitely a big factor in the equation that led me here.

Last week's U.S. stock market nosedive resulted in a sizeable devaluation of the dollar here as well. I've suddenly found my salary and savings slashed by a whopping 20%. There's no other way to say it -- OUCH! My only solace is to keep in mind that in time, the market always evens itself out. But how long will it take to recover from recent downward trends? Will the dollar continue to plunge for months to come? How much farther will it fall? Are we heading towards a severe economic depression, as many financial analysts are forecasting? Or is this just a painful hiccup that will go away on its own without much more financial crisis?

For the time being, at least, I'll be keeping my earnings right here in Korea. And I'm lucky, in that regard, that I have a fairly long stretch to wait out a possible recovery. For those expats who don't have the same flexibility, particularly TEFL teachers who are ending contracts and returning home within the next month or two, their earnings can't help but be painfully squeezed. I'll be keeping an eye on the economy, to be sure. And in the meantime, I'll be hopeful that Americans won't lose their confidence in the economy. A further market collapse is one self-fulfilling prophecy this world doesn't need.