Won-Dollar Exchange Rate Hits New Annual High... Surpasses 1300 Won Again

On the morning of the 22nd, an employee is working in the dealing room of Hana Bank in Jung-gu, Seoul.
[Image source=Yonhap News]

The won-dollar exchange rate rose by more than 10 won on the 22nd, surpassing 1,300 won again. This is the highest level in two months since December 19 last year.

On this day, in the Seoul foreign exchange market, the won-dollar exchange rate was trading at 1,303.8 won as of 9:43 a.m. The rate started at 1,306.2 won, up 10.3 won from the previous trading day, and has been fluctuating in the low 1,300 won range.

The won-dollar exchange rate fell to 1,216.4 won on the 2nd but rose nearly 90 won in just 20 days. It also broke the recent high of 1,303.8 won recorded on the 17th.

The recent sharp rise in the exchange rate is due to expectations that the U.S. Federal Reserve (Fed) will further strengthen its tightening stance.

Concerns are growing that inflation may become entrenched as U.S. employment, inflation, and consumer indicators have consecutively exceeded market expectations, and with Fed officials making hawkish remarks, tightening fears are spreading again in the market.

James Bullard, President of the St. Louis Federal Reserve Bank, and Loretta Mester, President of the Cleveland Fed, both classified as hawks, have argued that the Fed should implement a 'big step' (a 0.50 percentage point increase in the benchmark interest rate) next month.

Due to 'interest rate fears,' the Dow Jones Industrial Average in New York closed at 33,129.59, down 697.10 points (2.06%) from the previous session on the 21st (local time).

The Standard & Poor's (S&P) 500 index fell 81.75 points (2.00%) to 3,997.34, and the tech-heavy Nasdaq index plunged 294.97 points (2.50%) to 11,492.30, closing the session lower.

The Korean won has recently been showing a weakening trend. The Bank of Korea's Monetary Policy Committee is likely to keep the base rate unchanged this week, but if the Fed raises rates next month, the interest rate gap between Korea and the U.S. will widen further, increasing volatility in the won-dollar exchange rate.

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