Impact of "$100 Oil"... Won-Dollar Exchange Rate Closes Up 3.8 Won at 1,497.5 Won (Update)
Highest Level in 17 Years Surpassed in Just One Week
The won-dollar exchange rate closed at 1,497.5 won on March 16. This was due to growing risk aversion among investors as international oil prices hovered above 100 dollars for several consecutive days.
On this day, the won-dollar exchange rate on the Seoul foreign exchange market ended at 1,497.5 won as of 3:30 p.m., up 3.8 won from the previous trading day. The rate opened at 1,501.0 won, up 7.3 won, and narrowed its gains shortly after the opening, even slipping into a decline during the morning session, but later reversed and closed higher.
The closing price on March 9, when international oil prices first surpassed 100 dollars, reached 1,495.5 won, the highest level since November 25, 2008 (1,502.3 won). It surpassed that level in just one week.
This is because the United States-Iran war, initially expected to be short-lived, is now entering a prolonged phase. Recently, Iran has closed the Strait of Hormuz and sunk vessels, while the United States has continued to bomb Iranian oil facilities, sending international oil prices soaring. On this day in the Asian market, West Texas Intermediate (WTI) crude oil futures prices exceeded 100 dollars, and are currently trading at 99.43 dollars.
The dollar is also strengthening as a result of rising risk aversion toward risk assets. The dollar index, which measures the value of the dollar against the currencies of six major countries, is at the 100.394 level. It rose to 100.537 on March 14, up from the pre-war range of 97-98, then edged down slightly but remains above the 100 mark. Generally, a dollar index above 100 is interpreted as a sign of relative dollar strength.
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Net selling by foreign investors in the KOSPI market, amounting to 847.5 billion won on this day, is also cited as a factor driving the exchange rate higher. The KOSPI fluctuated between gains and losses throughout the session before closing at 5,549.85, up 62.61 points (1.14%).
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