Despite Big Step, USD-KRW Exchange Rate Surpasses 1320 Won... Highest in 13 Years (Comprehensive)

Continued Rise in USD-KRW Exchange Rate Despite Big Step
New High at Market Open... Highest in Nearly 13 Years
Increased Dollar Preference Amid Accelerated Fed Rate Hikes

On the morning of the 15th, employees are working in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. On this day, the KOSPI index opened at 2,335.12, up 12.80 points (0.55%) from the previous session, and the KOSDAQ index opened at 768.41, up 2.33 points (0.30%). The won/dollar exchange rate started at 1,318.0 won, up 5.9 won. [Image source=Yonhap News]

The won-dollar exchange rate surpassed 1,320 won during trading on the 15th, reaching its highest level in 13 years and 2 months.

According to Seoul Foreign Exchange Brokerage, the won-dollar exchange rate rose to 1,320.2 won at around 9:07 a.m. that day. This is an increase of 8.1 won compared to the previous day's closing price.

The exchange rate started at 1,318.0 won, up 5.90 won from the previous day, and broke through the 1,320 won level in less than 10 minutes.

It continued to rise afterward, reaching as high as 1,322.4 won, fluctuating around the 1,322 won level as of the morning.

This is the first time the exchange rate has surpassed 1,320 won since April 30, 2009 (1,325 won).

The exchange rate continues its upward trend. The yearly high recorded on the 12th (1,316.4 won at the high) was broken within three trading days.

After the Bank of Korea implemented its first-ever 'big step' (a 0.5 percentage point hike in the base interest rate) on the 13th, the exchange rate paused somewhat but surged again after two days, showing signs of instability.

Recently, as the U.S. inflation rate continues to soar, expectations that the Federal Reserve (Fed) will significantly raise interest rates have increased, strengthening the preference for the dollar, which is interpreted as the cause.

The U.S. Consumer Price Index (CPI) for June, released on the 13th, rose 9.1% year-on-year, marking the highest level in 41 years, and the June Producer Price Index (PPI) released overnight also rose 11.3%, the highest in three months.

With analyses suggesting that U.S. inflation may rise further, the Fed is also likely to continue its high-intensity tightening. A 0.75 percentage point hike is gaining traction at this month's Federal Open Market Committee (FOMC) regular meeting. Hawkish (monetary tightening) members within the Fed are also leaning toward a 0.75 percentage point increase.

Due to the sharp decline in the won's value, the KOSPI also turned weak in early trading. As the U.S. accelerates tightening, not only the won but also other major currencies such as the euro, yen, and yuan continue to decline, fueling dollar strength and pushing up the won-dollar exchange rate.

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