The Bank of Korea Says "Exchange Rate Volatility Increases Amid Concerns Over New Coronavirus"

[Asia Economy Reporter Kim Eun-byeol] The volatility of the KRW-USD exchange rate has increased due to the impact of the novel coronavirus infection (Wuhan pneumonia).

According to the Bank of Korea's 'International Finance and Foreign Exchange Market Trends since January 2020' on the 12th, the KRW-USD exchange rate volatility last month was 4.6 won, up from 3.7 won the previous month. The volatility rate also rose to 0.39% from 0.32% the previous month.

Comparing the volatility rates with major currencies, Korea's volatility rate (0.39%) was the third highest after Brazil (0.49%) and Russia (0.45%). The volatility rate of the Japanese yen was 0.22%, the euro was 0.21%, and the US dollar was around 0.15%.

The KRW-USD exchange rate showed stability in January due to reduced risks in the Middle East and the US-China Phase One trade agreement, but began to rise after the 21st as the novel coronavirus spread.

In January, foreign investment in domestic securities turned to net inflow as bond funds, mainly public funds, flowed in significantly. However, stock fund inflows shrank from $660 million in 2019 to $370 million in January due to concerns over the spread of the novel coronavirus.

External borrowing conditions generally remained favorable. In January, the short-term foreign currency borrowing spread of domestic banks and the average monthly CDS premium of foreign exchange stabilization bonds (5 years) remained at low levels.

This content was produced with the assistance of AI translation services.