Exchange Rate Closes at 1,237 Won... Highest in 1 Year and 9 Months

Impact of Stagflation Fears Amid High Oil Prices

On the 8th, KOSPI opened at 2,617.33, down 33.98 points (1.28%) from the previous trading day, as dealers were working in the Hana Bank dealing room in Jung-gu, Seoul. On the same day, the won-dollar exchange rate surpassed 1,230 won intraday for the first time in 1 year and 9 months. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Hwang Yoon-joo] The won/dollar exchange rate surged nearly 10 won on the 8th, surpassing the 1,230 won per dollar mark. This is the first time in 1 year and 9 months since May 29, 2020 (1,238.5 won) that the won/dollar exchange rate closed above 1,230 won.

On that day, in the Seoul foreign exchange market, the won/dollar exchange rate closed at 1,237.0 won, up 9.9 won from the previous day.

The US dollar strengthened against major currencies as safe-haven demand spread amid concerns of stagflation (economic slowdown with rising prices) caused by the sharp rise in international oil and energy and raw material prices following Russia's invasion of Ukraine.

The previous day, the US New York stock market plunged, with the Dow Jones Industrial Average entering a correction phase, falling more than 10% from its January peak, and the Nasdaq index entering a bear market, dropping more than 20% from its high in November last year.

As the Ukraine war prolongs, news that the US is considering banning imports of Russian oil triggered a sharp rise in oil prices, significantly dampening investor sentiment.

On the same day, the KOSPI also closed down 1.09% at 2,622.40, marking its third consecutive day of decline. Foreign investors sold a net 476.3 billion won worth of stocks in the KOSPI market, continuing the pressure on the won/dollar exchange rate following the previous day's net selling exceeding 1 trillion won. However, the upward pressure eased compared to the previous day due to concerns over the rapid rise in the exchange rate for two consecutive days.