Won-Dollar Exchange Rate's 'Unstoppable Rise'... Possibility of Surpassing 1350 Won (Comprehensive)

Surpassing 1,340 Won After 13 Years and 4 Months

[Image source=Yonhap News]

[Asia Economy Reporters Seo So-jeong, Moon Je-won] The won-dollar exchange rate surpassed the 1,340 won mark on the 22nd for the first time in 13 years and 4 months, showing an unstoppable upward trend.

According to the Seoul foreign exchange market, the won-dollar exchange rate soared to 1,340.2 won at 1:52 p.m. that day, breaking through the 1,340 won level.

The exchange rate, which started trading at 1,335.5 won, up 9.6 won from the previous trading day, rose to the 1,338 won range in the early session, fluctuated around the 1,330 won range, and then surpassed the 1,340 won level in the afternoon.

This is the first time in about 13 years and 4 months since the financial crisis on April 29, 2009 (high of 1,357.5 won) that the exchange rate has exceeded 1,340 won.

The recent sharp rise in the exchange rate is due to growing expectations that the U.S. Federal Reserve's policy of raising the benchmark interest rate will continue for some time, following the release of the minutes of the July Federal Open Market Committee (FOMC) meeting on the 17th (local time).

Also, on the same day in the afternoon, the People's Bank of China, the central bank, cut the one-year loan prime rate (LPR), which is effectively the benchmark interest rate, from 3.70% to 3.65%, a 0.05 percentage point reduction, causing the yuan to weaken, which also appears to have influenced the exchange rate.

Since rising to the 1,300 won range on June 23, the exchange rate broke through 1,310 won and 1,320 won on the 6th and 15th of last month, respectively, and on this day, it consecutively surpassed 1,330 won and 1,340 won.

An official from the foreign exchange market said, "The weakness of major currencies such as the yuan and euro, as well as the weakened expectations for improvement in the domestic trade balance, are factors that have fueled the dollar's strength."

Experts predict that the foreign exchange market will continue to experience high volatility for the time being.

Lee Bu-hyung, director at Hyundai Research Institute, said, "After the release of the FOMC minutes, the Fed took a somewhat ambiguous stance, which seems to have acted as a negative factor for the market," adding, "Recently, some Fed officials have supported a giant step (a 0.75 percentage point increase in the benchmark interest rate), increasing concerns about tightening." He also said, "At the Jackson Hole meeting scheduled for the 26th, Federal Reserve Chair Jerome Powell is also expected to express his intention to tighten monetary policy, heightening market caution," and predicted, "Until the market confirms its direction, the exchange rate is likely to remain unstable."

Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "From the supply and demand perspective, the KOSPI's drop of more than 1% is also pushing up the exchange rate," adding, "With the exchange rate rising at a steeper pace than expected, the possibility of breaking through the 1,350 won level, which was seen as the upper limit for the second half of the year, cannot be ruled out."

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