Won-Dollar Exchange Rate '1350 Won' Dispute

According to the strong dollar outlook,
this week's KRW-USD exchange rate expected to battle around 1350 won

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Junho] As Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), further strengthened the dollar's bullish momentum, concerns are emerging that the KRW-USD exchange rate could surpass 1,350 won.

As of the 25th, the dollar index stood at 108.8, up 0.59% from the previous week. The KRW-USD exchange rate recorded 1,331.3 won, rising 0.41% compared to the previous week.

In this context, Chairman Powell stated at the Jackson Hole meeting on the 26th (local time) that the Fed will continue its rate hike stance and that "it is necessary to maintain a restrictive (monetary) policy stance for the time being" thereafter.

Regarding this, Park Sanghyun, a researcher at Hi Investment & Securities, observed on the 19th, "Through Chairman Powell's Jackson Hole meeting, the Fed's hawkish stance has been confirmed, and there is currently no momentum or event that could break the dollar's bullish trend for the time being."

As major currencies continue to weaken, the possibility of further strengthening of the dollar is high. In the case of the euro, the prevailing view is that the additional weakening trend is likely to continue. Energy concerns stemming from natural gas have not been resolved, and drought risks could exert downward pressure on the euro's value following the European economy. The British pound is also plunging, reflecting stagflation risks in the UK economy.

The yuan also finds it difficult to find momentum to reverse its downward trend. Although successive stimulus measures have been announced to defend the economy, doubts about the effectiveness of these measures are rather limiting a rebound in the yuan's value. In this situation, the manufacturing PMI index for August, to be released this week, is also highly likely to fall below the 50-point threshold for the second consecutive month.

Researcher Park said, "Considering the unstable external conditions, the KRW-USD exchange rate is highly likely to threaten the 1,350 won level again this week." However, he added, "The government's determination to defend the 1,350 won level is strengthening, so the 1,350 won resistance line may not be easily breached," and "a confrontation between the market and the government over the 1,350 won level is expected."

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