Exchange Rate Drops to Lowest Level in 6 Months... "Year-End Downward Stabilization Trend"

Won-Dollar Exchange Rate Falls to 1,270 Won Range
Year-End Dollar Selling by Export Companies

On the 26th, the KOSPI opened at 2312.54, down 1.15 points (0.05%) from the previous trading day, at the Hana Bank dealing room in Jung-gu, Seoul. The won-dollar exchange rate opened at 1276.0 won, down 4.8 won from the previous trading day. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate has fallen to the 1,270 won level, marking its lowest point in six months. With no major year-end events on the horizon, downward pressure is expected to continue as export companies bring in year-end negotiation (dollar selling) volumes.

According to the Seoul foreign exchange market on the 26th, as of 10 a.m., the won-dollar exchange rate recorded 1,278.5 won, down 2.3 won from the previous trading day's closing price. The rate started the day at 1,276.0 won, down 4.8 won from the previous close, and has been fluctuating in the high 1,270 won range. With major financial markets, including the U.S., closed for the Christmas holiday, and no significant events to watch for, trading activity remains subdued.

Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "As the foreign exchange market enters the year-end season, the order book has thinned," adding, "This week, the exchange rate is expected to maintain a cautious stance rather than showing a clear direction." However, Oh noted, "The basis for year-end dollar buying may weaken," and cautioned that "volatility could increase depending on foreign flows in the stock market."

The won-dollar exchange rate has stabilized since October. After surging to 1,439.9 won on September 28 due to the U.S.'s rapid interest rate hikes, the rate has gradually calmed and shown a downward stabilization trend. As the won-dollar exchange rate continued to decline, it closed at 1,276.2 won on the 22nd, marking the lowest level in six months. This is the lowest closing rate since June 10 (1,268.9 won), about six months ago.

Experts expect the year-end market to be a period of pause, given the absence of major economic indicators or notable events that could significantly impact the foreign exchange market. However, recent volatility in the yen and yuan is seen as a factor warranting caution.

Park Sang-hyun, a researcher at Hi Investment & Securities, said, "There is strong expectation for further yen appreciation, and uncertainties related to China's 'With Corona' policy could lead to yuan instability," adding, "Although a pause is expected ahead of market close due to the rapid decline in the won-dollar exchange rate, volatility could increase depending on the yen and yuan trends." Baek Seok-hyun, a researcher at Shinhan Bank, forecasted, "The exchange rate, which has fallen to a six-month low, is expected to show a year-end downward stabilization trend," and added, "The dollar selling volume from export companies ahead of year-end will also act as downward pressure on the exchange rate."

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