The Won-Dollar Exchange Rate Hits a New High Again... Rising to the 1277 Won Level

An employee is organizing US dollars at the Hana Bank Counterfeit Response Center in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The won-dollar exchange rate has once again reached a new high due to the Federal Reserve's (Fed) interest rate hike impact.

On the 10th, in the Seoul foreign exchange market, the won-dollar exchange rate started trading at 1,276.0 won, up 2.0 won from the previous trading day. The rate then quickly rose to 1,277.9 won, marking a new high for three consecutive trading days. This is the highest level since March 23, 2020, in terms of the high price, in over two years and one month.

As of 9:30 a.m., the won-dollar exchange rate is trading at 1,277.6 won. The U.S. Federal Open Market Committee (FOMC) implemented a 'big step' (a 50 basis point increase in the benchmark interest rate) at its regular meeting on the 4th (local time), and concerns about stagflation have increased preference for the safe-haven dollar, causing the exchange rate to rise continuously.

The weakening of the Chinese yuan, which the won tends to follow, is also contributing to the depreciation of the won. The yuan is trading at around 6.76 yuan, up 0.03% from the previous session, but it still shows a weak trend against the dollar.

Among experts, there is an analysis that the upper limit of the exchange rate should be opened from the 1,280 won range to 1,300 won. If the U.S. inflation rate for April, to be announced on the 11th local time, exceeds the Dow Jones expected level of 8.1%, the Fed's monetary policy tightening could gain more momentum, leading to further won depreciation.

However, the inflow of dollar-selling volumes from export companies may limit further increases in the exchange rate.

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