[Real Estate Finance] "Exchange Rate to Reach 1450 Won by Year-End"... King Dollar to Persist Until Year-End

US Ongoing Interest Rate Hikes Direct Hit
"Exchange Rate Volatility to Continue for the Time Being"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Will the KRW-USD exchange rate surpass the psychological resistance level of 1,400 won? As the soaring dollar value draws market attention on how far it will rise, the prevailing market outlook is that a strong dollar around 1,400 won will persist until the end of the year.

According to the financial investment industry on the 15th, NH Investment & Securities raised the upper limit of the exchange rate for this year to 1,450 won. This is due to the expectation that despite the European Central Bank (ECB)'s giant step, the U.S. holds the upper hand in tightening momentum, and the U.S. administration will tolerate the strong dollar trend ahead of the midterm elections. There are also repercussions from Europe’s recession concerns and euro weakness caused by the Russia-originated energy crisis due to the Ukraine war.

Jeon Gyu-yeon, a researcher at Hana Securities, also diagnosed, "The KRW-USD exchange rate may temporarily rise above 1,400 won," adding, "So far, the upside potential is judged to be greater." He continued, "In a situation where the dollar strength has not subsided, the KRW-USD exchange rate cannot fall alone." Kim Yu-mi, a researcher at Kiwoom Securities, predicted, "Concerns about U.S. tightening have already been reflected in the KRW-USD exchange rate," and "The exchange rate in the high 1,300 won range will continue and may rise to 1,400 won by the end of the year."

There is also a forecast that the option for a rate hike at this month’s Federal Open Market Committee (FOMC) meeting changing from 50?75 basis points to 75?100 basis points could further fuel dollar strength. Kim Seung-hyuk, a researcher at NH Futures, explained, "If the psychological resistance level of 1,400 won is broken, additional overshooting (temporary surge) is possible."

Many expect the exchange rate to stabilize only after the end of the year or the first quarter of next year, when U.S. tightening ends. Heo Jae-hwan, a researcher at Eugene Investment & Securities, said, "It is expected that the speed of won depreciation will calm down when the U.S. monetary policy transition or the interest rate hike cycle concludes." Jeon added, "The Federal Reserve (Fed) is expected to change its stance only if employment indicators worsen slightly, and this point is forecasted to be around the end of the year."

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