1.20 Explain what the outcome is on the won–dollar exchange rate as more speculators buy won assets. Would expectations become self-fulfilling? South Korea has introduced a series of capital controls in recent months to try and stem speculative capital inflows. Foreign speculators have been buying won-denominated assets in anticipation of an appreciation against the US dollar. However, analysts say that it would be difficult to use capital controls and other measures to reverse the strengthening of the won because the Korean currency has been boosted by the country’s relatively strong economic fundamentals and widening trade surplus.