Won-Dollar Exchange Rate Hits New High Again... Foreign Exchange Authorities "Monitoring with Caution"

On the morning of the 15th, the KOSPI and the won/dollar exchange rate, which started trading that day, are displayed on the monitors in the dealing room of Hana Bank in Jung-gu, Seoul. [Image source=Yonhap News]

The won-dollar exchange rate rose to 1,397.8 won during trading on the 15th, setting a new intraday high after just one day. The foreign exchange authorities stated that they are "closely monitoring the situation" and have engaged in verbal intervention.

On that day, in the Seoul foreign exchange market, the won-dollar exchange rate climbed to 1,397.7 won around 1:08 p.m. This is the highest level in about 13 years and 5 months since March 31, 2009 (intraday high of 1,422.0 won).

In response, the foreign exchange authorities announced in the afternoon that "amid the recent external factors causing increased volatility of the won, we are monitoring the market closely with caution regarding the possibility of market concentration."

This is interpreted as a response to the exchange rate approaching 1,400 won. Afterwards, the exchange rate somewhat stabilized, showing 1,391.9 won as of 1:45 p.m.

The won-dollar exchange rate opened at 1,391.0 won that day, surpassing the previous day's intraday high of 1,395.5 won and pushing the upper limit higher.

The strong dollar phenomenon is intensifying as the U.S. August Consumer Price Index (CPI) shock leads to expectations of a sharper increase in the Federal Reserve's benchmark interest rate.