'Yeongojum' Won-Dollar Exchange Rate Surpasses 1444 Won... Soaring Amid Yuan Weakness

[Image source=Yonhap News]

The won-dollar exchange rate surged to 1,444.2 won on the 25th, setting a new yearly high. Although it showed some hesitation the previous day due to expectations of a slowdown in the U.S. Federal Reserve's (Fed) tightening pace, the weakening of the Chinese yuan is analyzed to have driven the won-dollar exchange rate upward.

On that day, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,444 won, up 4.3 won from the previous trading day's closing price of 1,439.7 won. This surpassed the intraday yearly high of 1,442.2 won recorded on the 28th of last month, marking the highest level in 13 years and 7 months since March 16, 2009 (1,488.0 won).

After opening, the exchange rate reached a high of 1,444.2 won but then narrowed its gains, fluctuating around 1,440 won in the early trading hours. The rise in the won-dollar exchange rate on this day is attributed to the significant drop in the yuan, following the formation of President Xi Jinping’s third-term leadership team composed entirely of loyalists.

As reformist factions within China, such as Premier Li Keqiang, weaken and Xi’s close aides gain power, market anxiety is increasing. Consequently, the offshore yuan-dollar exchange rate rose to 7.3 yuan, and the stock prices of Chinese companies listed in the U.S. also plummeted.

The won tends to follow the yuan, so the intraday direction of the yuan is expected to influence the won-dollar exchange rate movements. The dollar index, which shows the value of the dollar against six major currencies, fell by 0.065 points to 111.898 on the 24th (local time) compared to the previous day.

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