Won-Dollar Exchange Rate Soars to 1,345.2 Won... Authorities Step Up to Block 1,350 Won (Comprehensive)

Ahead of the Jackson Hole Meeting, Early Tightening Anticipated

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate surpassed the 1,340 won mark again on the 23rd, reaching new highs. Although the foreign exchange authorities intervened verbally for the first time in two months to curb the relentless rise in the exchange rate, preventing it from entering the 1,350 won range, the rate expanded its gains again in the afternoon, recording around 1,343 won.

According to the Seoul foreign exchange market on the day, the won-dollar exchange rate stood at 1,343.6 won as of 2:30 p.m., exceeding the 1,340 won level. The exchange rate started trading at 1,341.8 won, up 2.0 won from the previous day's closing price, breaking the previous record high of 1,340.2 won set the day before.

The won-dollar exchange rate broke through the 1,330 won and 1,340 won levels consecutively during the previous day’s session, marking the highest level in 13 years and 4 months. On the day, the rate climbed to a high of 1,345.2 won around 9:05 a.m., showing a steep upward trend.

In response to the sharp rise in the exchange rate, the foreign exchange authorities conducted verbal intervention for the first time in about two months in the morning. A foreign exchange official stated, "We will closely examine whether there are speculative factors, especially offshore, contributing to the rise in the won-dollar exchange rate amid the recent global dollar strength." President Yoon Suk-yeol said during his morning remarks, "I understand that the public may be worried about the exchange rate soaring to 1,340 won," adding, "We will manage it well so that the public does not feel anxious." After the intervention by the authorities, the won-dollar exchange rate slightly dropped to the 1,339 won level but expanded its gains again in the afternoon.

Experts predict that the strong dollar phenomenon will continue for the time being, increasing volatility in the foreign exchange market. Moon Hong-chul, a researcher at DB Financial Investment, said, "With inflation shocks in the UK and Germany and the possibility of stagflation in Europe being raised, currencies other than the dollar, such as the euro, are weakening simultaneously, making the dollar relatively more attractive," adding, "Although export companies are selling dollars (negotiating) toward the end of the month, the exchange rate will continue attempts to break through 1,350 won for the time being."

Lee Bu-hyung, director at Hyundai Research Institute, said, "At the Jackson Hole meeting scheduled for the 26th (local time), Federal Reserve Chair Jerome Powell is also expected to express his intention to tighten monetary policy, increasing market caution," adding, "Volatility in the foreign exchange market is expected to continue until the market direction is confirmed."

As the exchange rate rises more steeply than expected, the financial investment industry is also adjusting the upper limit of the exchange rate forecast for the second half of the year. The possibility of breaking through the 1,350 won level, previously seen as the peak for the second half, is not being ruled out.

Jeon Gyu-yeon, a researcher at Hana Securities, said, "It is difficult for the global strong dollar trend itself to change," adding, "In the second half, the dollar will maintain a strong and steady trend reflecting the Federal Reserve’s policy stance and the difference in economic strength between the U.S. and Europe." Jeon also said, "The market is preemptively pricing in U.S. tightening ahead of Jackson Hole, causing the exchange rate to rise," adding, "However, the level is becoming burdensome, so the first resistance level is 1,350 won, and if this resistance is broken, the possible upper limit will be around 1,365 won."

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