Korea research appraises exchange rate volatility

Bank of Korea, Seoul

A working paper published by the Bank of Korea on December 28, suggests a "medium level" of exchange rate volatility is most beneficial to the country's economic stability.

The authors, Kyongwook Choi, Kyuil Chung and Seungwon Kim, explore the relationship between the exchange rate and capital inflows, and find that both high and low levels of exchange rate volatility can harm the economy.

Uncertainty prevails under a high level of volatility, the authors explain, and discourages international

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