The following graph shows the monthly value of the South Korean Won relative to the US dollar from 1996-1999. USD/KRW 0.0014 0.0012 0.0010 0.0008 0.0006 0.0004 0.0002 0.0000 01-Jul-1997 01-Jul-1998 01-Jul-1996 01-Jul-1999 01-Jan-1998 01-Jan-1996 01-Sep-1996 01-Jan-1999 01-Sep-1999 01-Jan-1997 01-Nov-1998 01-Sep-1997 01-Nov-1996 01-Sep-1998 01-Mar-1998 01-Mar-1997 01-Mar-1999 01-May-1998 01-Nov-1999 01-May-1997 01-Mar-1996 01-May-1999 01-Nov-1997 01-May-1996 (i) Suppose we assume that prior to the sharp depreciation the Won was overvalued relative to the US dollar. Use a supply and demand model for the Won to illustrate this situation. (ii) Briefly explain the type of intervention required by the Korean Central Bank to maintain an overvalued exchange rate. (iii) Is the following graph of the Korean Central Bank's holdings of foreign exchange reserves consistent with a speculative attack on the Won? Explain. Foreign Reserves for South Korea 40.000 30.000 SUS Bill 20.000 10.000 0.000 1997 2 1997 3 1997 4 (iv) What was the outcome of the speculative attack on the KRW? (v) What policy options were open to South Korea to defend the Won against a speculative