Won-Dollar Exchange Rate Breaks 1270 Won... Hits New 5-Day High
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[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate surpassed 1,270 won during trading on the 28th.
According to the Seoul foreign exchange market on the day, the exchange rate, which started at 1,265 won, down 0.2 won, increased its intraday gains and rose to the 1,270 won level. This is the first time in 2 years and 1 month since March 23, 2020 (1,282.5 won) that the exchange rate has exceeded 1,270 won during trading.
Due to concerns over the Federal Reserve's (Fed) aggressive tightening and economic slowdown caused by China's lockdown measures, the exchange rate has been hitting new highs day after day.
Despite verbal intervention by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki on the day, it was insufficient to stop the rise in the exchange rate. Before the market opened, Deputy Prime Minister Hong expressed concern, saying, "The won-dollar exchange rate has been rising rapidly this week, and if necessary, we will make efforts to stabilize the market."
The dollar index, which shows the value of the dollar against the currencies of six major countries, rose to the 103 level on the day. This is the highest since January 2017.
The euro weakened due to Russia's suspension of natural gas supply to some European Union (EU) member countries, influencing the strength of the dollar. The won is also under downward pressure as the yuan continues to weaken amid concerns over China's lockdown measures.
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Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "As domestic and international uncertainties such as the Ukraine crisis remain unresolved and anxiety grows, the preference for the dollar, a representative safe-haven asset, is strengthening," adding, "With the Federal Open Market Committee (FOMC) approaching, concerns over aggressive U.S. tightening will continue, and the upward trend is expected to persist for the time being."
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