| Decline of Japanese yen,
Korean won could mean smaller COLA in Pacific
Stars
and Stripes
Military
and DOD civilian employees in the Pacific could see a drop
in their paychecks in the coming months.
The
Korean won and Japanese yen have fallen in relation to the
U.S. dollar in recent weeks as Japan’s Nikkei stock index
has hit 16-year lows.
U.S.
investors’ fears over Japan’s weak banking system
have weakened the yen to the point where it takes more than
120 to equal one dollar. That’s a 10 percent change in
a little more than a month. The yen’s decline has strengthened
the U.S. dollar in other countries, including Korea, a Bank
of Korea analyst said.
That
means cost of living allowances, for military members, and
post allowances, for DOD civilians, could be going down soon.
Both pay rates are affected by the exchange rates in the host
country, as well as by the cost of goods there, according
to the U.S. Office of Personnel Management Web site.
Foreign
exchange rates are monitored by the Defense Department’s
Per Diem Committee. As the amount of foreign currency a dollar
"buys" changes, the committee increases or decreases
cost-of-living allowances to maintain its purchasing power.
When
the yen or won rates fall, the price military members pay
for food, clothing and other items off base goes down. Therefore,
cost-of-living allowances and post allowances tend to fall,
the Web site said.
In
South Korea, the won fell to 1,300 won to one U.S dollar on
the foreign exchange market, a two-year low. Currency experts
say they expect the U.S. dollar to remain high for at least
the next few days.
The
dollar opened at 1,295 won Monday, but immediately began creeping
upward. By early afternoon, it reached 1,300.40 won, sending
many U.S. military personnel, U.S. government civilians and
their family members scurrying to money changers.
It
was the first time since Nov. 18, 1998, that the dollar has
broached the 1,300 won level. At one point Monday afternoon,
money changers in Pyongtaek, where Osan Air Base and Camp
Humphreys are located, were changing dollars at 1,307 won.
The
market closed at 1,299.20 won to the dollar Monday, but Pyongtaek
money changers said they expected the rate to rise above 1,300-to-one
again on Tuesday. The exchange rate for the won was set at
1,269 for Wednesday.
The
yen exchange rate at Community Banks in Japan was 119 yen
to the U.S. dollar.
Analysts
for the Bank of Korea and several commercial banks attributed
the dollar’s rise to a slip in the value of the Japanese
yen and shaky stock markets.
"The
Bank of Japan has made no decision on cutting interest rates,
and the won’s value is closely tied to the value of the
yen," an analyst for the Hanvit Bank said.
He
predicted the dollar would remain high against the won and
yen "for the immediate future. It’ll hover around
1,300 won to the dollar, maybe a bit higher."
Osan
bureau chief Jim Lea contributed to this report.
Back to March's stories
Page Two news roundup
Stories from February, 2001
Stories from January, 2001
Stories from December, 2000
Stories from November, 2000
Stories from October, 2000
Stories from August and September, 2000
Stories from June and July, 2000
Home |
