Strengthening Financial Markets Could Ease Exchange Rate Pressures Worldwide
The article explores what affects a country's current account and exchange rate. It suggests that a country's current account imbalance can improve if its financial market grows or if it has better access to international markets. The study also indicates that estimates of current account balances may be underestimated for countries like Korea. Additionally, it finds that the weak value of the Korean won compared to the Chinese yuan is likely due to structural reasons.