Sharp Rise in KRW-USD Exchange Rate to Late 1277 Won Level Amid US Stock Market Shock (Comprehensive)

On the 17th, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On that day, the KOSPI index opened at 2603.58, up 7.00 points (0.27%) from the previous trading day. The won-dollar exchange rate started at 1280 won, down 4.1 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate closed with a surge of more than 11 won, influenced by the sharp decline in the U.S. stock market.

On the 19th, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,277.7 won, up 11.1 won from the previous day's closing price.

After falling for four consecutive trading days to the mid-1260 won range, the exchange rate rebounded on this day, soaring to the high 1270 won range.

Overnight, the U.S. stock market sharply declined due to concerns over stagflation, heightening risk aversion sentiment. The previous day, the U.S. Standard & Poor's (S&P) 500 index plunged 4.04%, marking the largest drop since June 11, 2020 (-5.89%) during the early spread of COVID-19.

In particular, Target, a leading U.S. retail company, reported first-quarter earnings far below expectations due to increased labor and logistics costs. As a result, Target's stock price plummeted 24.93% in one day, and Walmart also fell 6.79%.

The Wall Street Journal (WSJ) reported, "The deterioration in retail companies' earnings due to supply chain disruptions, rising costs, and sluggish sales has fueled concerns that the global economy may head toward a recession."

A foreign exchange market official said, "The poor performance of retail companies has led to concerns about an economic recession," adding, "The U.S. Federal Reserve is expected to continue the 'big step' of raising interest rates by 0.5 percentage points at once, and the growing sense of crisis over economic slowdown has affected the exchange rate."

As the won-dollar exchange rate approached 1,280 won again, the government stepped up monitoring.

Bang Ki-seon, First Vice Minister of the Ministry of Economy and Finance, chaired the 4th Emergency Economic Response Task Force (TF) meeting at the Government Seoul Office in the afternoon and stated, "We will strengthen monitoring of the foreign exchange market and implement timely response measures if necessary."