Won-Dollar Exchange Rate Closes at 1255.9 Won... Gains Reversed Following Verbal Intervention by Authorities

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] On the 29th, the KRW-USD exchange rate closed around the 1,250 won level.

On that day, in the Seoul foreign exchange market, the KRW-USD exchange rate closed at 1,255.9 won, down 16.6 won from the previous trading day.

After rising for six consecutive trading days until the previous day, the exchange rate reversed to a decline and entered a 'breather' phase. The exchange rate, which started at 1,272.0 won, down 0.5 won from the previous day, continued its downward trend, giving back the gains it had made.

It is analyzed that repeated verbal interventions by domestic foreign exchange authorities increased caution, which in turn added downward pressure on the exchange rate. Lee Eok-won, the 1st Vice Minister of Strategy and Finance, stated at the macroeconomic and financial meeting in the morning, "The government will closely monitor foreign exchange market trends and maintain the principle of implementing market stabilization measures if sudden market imbalances occur." This verbal intervention came after the KRW-USD exchange rate surged past 1,270 won intraday, reaching the highest level in nearly two years.

Vice Minister Lee emphasized, "We will focus our capabilities on proactively checking and blocking risk factors that domestic and international interest rate hikes may bring to the financial market," and added, "We will maintain close cooperation with related agencies and swiftly activate market stabilization measures when necessary." The previous day, Hong Nam-ki, Deputy Prime Minister and Minister of Strategy and Finance, also verbally intervened, stating, "We will make efforts to stabilize the market if necessary."

Additionally, the inflow of dollar-selling volumes from exporters facing the month-end is also interpreted as having influenced the decline in the exchange rate.

Moon Hong-chul, a researcher at DB Financial Investment, predicted, "With global inflation continuing, the strong tightening stance of the U.S. Federal Reserve (Fed), and the prolonged Ukraine war, the dollar's strength is expected to continue," and forecasted, "The upper limit of the exchange rate in the first half of the year should be kept open up to the 1,300 won level."

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