Exchange Rate Approaching the 1,200 Won Level
Impact of Strong US Dollar... Won Expected to Surpass 1200 Level in Q1
On the 5th, dealers were working in the Hana Bank dealing room in Euljiro, Seoul. On that day, the KOSPI index opened at 2,984.05, down 5.19 points (0.17%) from the previous session. The won-dollar exchange rate started at 1,197.0 won, up 2.9 won. Photo by Moon Honam munonam@
View original image[Asia Economy Reporter Jang Sehee] Amid the continued strength of the US dollar, the KRW-USD exchange rate has closely approached the 1,200 won level.
On the 5th, the KRW-USD exchange rate fluctuated in the high 1,190 won range. As of 10 a.m. in the Seoul foreign exchange market, the KRW-USD rate rose 3.9 won from the previous closing price to 1,198 won. The rate opened at 1,197.0 won, up 2.9 won from the previous day, and fluctuated between 1,197 and 1,198 won. At 9:59 a.m., it recorded 1,198.65 won.
The dollar's strength was also influenced by the expected acceleration of the US Federal Reserve's (Fed) interest rate hikes and the simultaneous rise in both short- and long-term US interest rates. On the 4th (local time) at 8:10 p.m., the Dollar Index continued its strength, rising 0.07 points from the previous session to 96.33.
Oh Changseop, a researcher at Hyundai Motor Securities, analyzed, "As the new year begins, the US interest rate hikes are becoming more active, and the dollar's strength is continuing while US Treasury yields are also rising together. Seasonal factors such as a decrease in dollar supply due to the current account balance likely played a partial role from a supply-demand perspective."
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There are also forecasts that the rate will exceed 1,200 won during the first quarter of this year. Researcher Oh stated, "Due to US monetary tightening and foreign dividend remittance demand, it is expected to surpass 1,200 won in the first quarter," adding, "If the Fed's interest rate hikes and the US economic recovery coincide, it could rise even further." He projected the short-term peak to be around 1,250 won.
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