iM Securities: "If High Oil Prices Persist, Settling at 1,500 Won per Dollar Is Inevitable"

This Week’s Exchange Rate Band Set at 1,480–1,520 Won

iM Securities stated that if high oil prices persist, it will be inevitable for the won-dollar exchange rate to stabilize at the 1,500 won level per dollar, suggesting a trading band of 1,480 to 1,520 won for this week.

Park Sanghyun, a researcher at iM Securities, said in the weekly exchange rate trend report released on Monday, March 16, "The ongoing high oil prices and concerns over a prolonged Iran crisis continue to be factors increasing volatility, while the strong dollar trend is also expected to persist."

Yonhap News Agency

Last week, the won-dollar exchange rate approached the 1,500 won level again, as the won weakened further due to persistently high oil prices, continued net selling of Korean stocks by foreign investors, and the formulation of an extra budget. Park commented, "The black hole phenomenon of the Iran crisis continues to dominate the global foreign exchange market. With the United States unable to find a way out of the Iran crisis, concerns over a prolonged situation have led to a surge in oil prices and further strength in the dollar. As inflation fears driven by oil prices spread, global capital has also withdrawn from safe-haven assets such as government bonds and gold."

In particular, Park noted that major monetary policy meetings this week, such as the US Federal Reserve's Federal Open Market Committee (FOMC), are unlikely to have a significant impact on the foreign exchange market. He assessed, "Market sentiment will continue to focus on oil prices," and added, "The risk of credit tightening, such as in the private equity market due to soaring interest rates, has also become a major variable for the foreign exchange market."

Accordingly, he predicted an exchange rate band of 1,480 to 1,520 won for this week. He forecast, "If high oil prices persist, it will be inevitable for the won-dollar exchange rate to stabilize at the 1,500 won level." He further added, "As the likelihood of the rate surpassing the 1,500 won threshold has increased, the level of government intervention will be the key factor."

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