In the last 15 years, South Koreas won has depreciated twice heavily and quickly against the US dollar. As large exchange rate fluctuations could impair economic growth and price stability, studying their root causes could help us understand them better and may help to mitigate their adverse consequences. This book argues that net capital outflows have significantly contributed to two won-depreciation events in the last 15 years. It also examines the role of macroeconomic fundamentals to control for differences between the US and Korea. The results from testing several model...