Pop culture exists everywhere. Whether it is blockbuster movies and world music superstars to viral social activities, content is what we watch, listen or read and, what we watch makes us think, act, and even spend like this! So what happens when it determines the manner in which currencies are behaving as well?
Although in the traditional approach foreign exchange markets are analysed through the prism of economical and political aspects in the cultural context the cultural phenomenon can establish the actual cross-border ripple effects. Viewers of entertainment who number in millions affect the demand trends, tourism patterns, brand status, and basically the value of money.
In the next article we are going to see that, the pop culture is making it in FX world, an unwarranted but formidable force and businesses need to start listening.
K-Pop and Korean Won: the Boom of a Cultural Export.
The success of K-pop, especially the popular groups such as BTS and BLACKPINK that conquered global music charts in the last few years, has achieved more than the hit positions in charts, as well. It is a soft power engine to the South Korean economy as it has contributed billions of dollars to the economy and also attracts tourists and increases the popularity of the Korean brands globally. When foreign followers throng Korea in order to attend concerts there, or buy goods produced by Korean manufacturers, there is a surging currency in favor of won in addition to the boosting effect it has on the local currency.
Indeed, it was approximated that BTS alone generates an economy of more than 5 billion dollars every year in South Korea and this is estimated by Hyundai Research Institute. These are not entertainment statistics: there is actual capital inflow, licensing income and tourism revenues, all of which have an impact on the exchange rates.
The U.S. Dollar and Hollywood: Cultural Expansion as Economical Perpetuation.
The US film and stream content is the benchmark of entertainment all over the world. The practice of Netflix to distribute its series across the globe, such as the Stranger Things or Hollywood blockbuster franchise does not only entertain, but it also exports streamline American culture and values. This cultural hegemony gives brand America added power to ensure exports of everything including fashion to fast food to raise more interest in investments based in the United States.
The result? Greater demand of U.S. dollar especially in those nations where American content is but a dream. The demand of foreigners in the services offered by the United States, streaming subscriptions, and even the academic opportunities keep the dollar as a global reserve currency.
The Euro and the Paris Fashion: the FX-flavored style.
Paris Fashion Week has its power that goes far beyond the catwalk when the world is turning towards it with attention. The fact that the world can read and talk about French companies specializing in fashion such as Chanel, Dior and Louis Vuitton affirms the perception of France being the center of luxury. This exposure accounts to a major basis of international sales as well as international tourism where customers end up coming to Paris precisely to make high-end purchases.
The more the luxury exports, the more there is the demand in the euro. The cultural value grows into money (in the literal sense) and it has been discovered that fashion is not only fashion, it is also economics. In this aspect, cultural diplomacy using fashion enhances the value of euro in an indirect manner.
Need to get ahead of the fluctuating FX movement? The pop-culture does not feature under your regular risk-register- but it should be in the radar. At KeyFX, we make businesses look not only before macroeconomic events but also happenings for the cultural trends that can influence the behavior of consumers and fluxes of currencies.
Viral Content and Short-Run Exchange Rates Changes.
Although long-term flows emanate due to the large-scale trends, short-time temporary changes in currency also can happen because of the viral content. What happens when a destination suddenly becomes popular on TikTok or a YouTube travel vlog, attracting a sudden wave of tourists? That interest has a potential of resulting into tourism actual money, which momentarily boosts local currency at the time when visitors spend money, stays in hotels, and consumes local experiences.
Tourist numbers have increased in the Maldives, Iceland and even such unlikely popular tourist destinations as Dubrovnik (since its game of thrones popularity).This is coupled with short-term FX impact which is ignored by the businesses that only look at traditional statistics.
Long Term Currency Health and Soft Power.
Countries which are putting in money in pop culture exports, such as Bollywood videos, anime among others, are also investing in soft power. This invisible power creates credibility, product name and economic appeal. It is not uncommon to find that nations with good cultural exports may enjoy better trade agreements, greater tourism and better sources of revenue thus helping in stabilizing the currency.
Soft power cannot be taken out of economic fundamentals, but it can complement that. The national brand remains cultural, and this is incorporated in national strategy, and this is what currencies portray.
It is no longer FX strategy which deals with economics alone but with culture as well. Both a fashion brand and an event planner, as well as global SMEs, pop culture identifies the locations of your client base, the places where a risk is to be taken.
Bollywood and the India Rupee a Global Cultural Power house.
The film industry of India also commonly called Bollywood is the biggest in the world in terms of volume. Bollywood films also give an incremental increase in the cultural soft power of India because it has an increasing number of fans all over the world, especially in other parts of the Middle East, Africa, and Southeast Asia. Even the streaming companies such as Amazon Prime and Netflix make such investments in the Hindi language content heavily, and Indian film stars are renowned beyond India.
This international fame attracts greater foreign income, tourist, and sale of merchandises particularly when fans take up the option of Bollywood tourism or international release. Although they are not as high as the bigger macro drivers, such inflows help the rupee and represent an increased role of India on cultural and economic podiums.
The Cross-Border Currency Flows and Streaming Services.
Worldwide streaming platforms, including Netflix, Disney+ and Prime Video, do not only localize the content, but globalize it. Such Spanish series as La Casa de Papel ( Money Heist ) or Korean dramas as Squid Games have become worldwide hits and made their countries places to visit and prompted an increase in interest in national products and media.
Once such shows become viral, their effects can be measured: there are surges in travel-related queries, there is export of local fashion and goods, as well as improvement in cultural affinities. The latter, in its turn, is translated into the augmented economic activity and, finally, into FX effect. Multinational firms ought to understand the impact that these cultures surges have on the demand trends and cash endangerment. —
Pop Culture: an FX Sentiment Indicator.
Technical FX With conventional FX analysis, a lot of importance is placed on the economic indicators such as interest rates, inflation, employment but the sentiment is equally critical. Pop culture has its effect on that feeling. A nation that is synonymous with inventiveness, creativity and relevance in the rest of the world is likely to be enticed with the sentiments of good investors and consumer demand.
In another set of examples, Japan: when it saw an international popularity of its anime in the 2000s and the 2010s, it did not only boost its sales in merchandise and tourism, but also made a reputation of Japan as the culturally rich and the technologically advanced country. Such perception contributed in making the yen to be more attractive when there was a stagnation in growth.
Sentiment measures Social media trend, media exposure An increasing number of currency traders, and particularly those practicing algorithmic trading, are now adding sentiment measures to their FX prediction models. Companies can also take advantage of such indexes of changes and use them as early warning signs of changes as well.
Brands tagging along the pop culture wave have implications on currency.
There is the question of brands entering into an alliance with the worldwide entertainment franchises or catching on the waves of the viral trends, which often results in the sudden increase in cross-border demand. When a fashion brand partnered with a particular artist or film production (e.g., Adidas x Beyonce or MAC Cosmetics x Marvel), the items in the collection are likely to skyrocket the sales in other countries. In case those transactions are FX-exposed, the treasury of the brand should expect fluctuation of the currency in line with the campaigns.
Also, organizations releasing products in line with some magnificent event should simulate the scenario of currency changes depending on possible fluctuations of demands. Some new exposures in FX can develop between night and day as a wave of interest on the culture of a particular country occurs.
The AI and Data in the Tracking of Cultural FX Impact.
The use of high level data analytics and AI is enabling the levels of monitoring on how pop culture is influencing real time behavior. Cultural inflection points can be identified with the help of social listening systems, Google Trends, and worldwide sentiment detectors that would allow businesses to be aware of these inflection points prior to their ultimate appearance on the market.
For example:
-The peaks of searches on Google with the topic of South Korea travel when the K-dramas are popular
-The surprise spikes of Amazon sales of Spanish-language books following a Netflix program
-The Change of the FX volume in those countries which get more focus on TikTok
At KeyFX such digital signals are part of our wider platform of FX intelligence to assist our clients to be ready to meet anticipated and unexpected demand changes.
Tourism-Driven Currency Cycles with the Pop Culture.
There is a lot of connection between pop culture and tourism. New Zealand (thanks to The Lord of the Rings), Thailand (The Beach), or Croatia (Game of Thrones) are the nations that experienced long-term tourism boom following their pop-culture moment. The inflow of tourists augers with the huge demand of foreign exchange that is beneficial to the local currency.
But the same can lead to the dependency. As soon as the cultural moment is over or geopolitical hazards appear, the value of currencies can be dropped once more. Economies and business enterprises in tourism, hospitality and luxury industries, should tread with caution when creating exposure to FX when the pop culture based tourism booms and plunges.
Culture as currency.
Economic influence can be cultural-wide in nature – that is, it is becoming an increasingly strong form of economic influence in a hyper-connected society.Be it in entertainment, fashion or contagious content, pop culture defines what people want, what they see and eventually how money flows across a national boundary.
Your FX strategy is not only about charts and forecasts, but about the cultural context. KeyFX assists you in reading any market signals on every aspect such as the cultural waves that influence consumers to spend and/or to move a market.
