[Exchange Rate 1400 Won] Historical Moments When the Exchange Rate Surpassed 1400 Won... 1997 Foreign Exchange Crisis and 2008 Financial Crisis

Choo Kyung-ho "Government to Mobilize All Available Means Considering Market Conditions"

On the 22nd, when the won-dollar exchange rate surpassed 1,400 won for the first time in 13 years and 6 months, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mo Honam munonam@

[Asia Economy Sejong=Reporter Kwon Haeyoung] The won-dollar exchange rate has surpassed the 1,400 won mark, spreading fear in the market. Historically, the exchange rate has only broken the 1,400 won barrier twice before: during the 1997 foreign exchange crisis and the 2008 financial crisis. Concerns are growing that a complex crisis caused by the 'three highs'?high inflation, high interest rates, and high exchange rates?could rapidly unfold.

According to the Seoul foreign exchange market on the 22nd, the won-dollar exchange rate opened at 1,398.0 won and immediately surpassed 1,400 won, setting a new high.

The exchange rate has exceeded 1,400 won only twice in history: during the 1997-1998 International Monetary Fund (IMF) foreign exchange crisis and the 2008-2009 global financial crisis. On this day, the exchange rate broke the 1,400 won level for the first time in 13 years and 6 months since March 31, 2009 (the high was 1,442.0 won), raising fears in the market that an economic crisis on the scale of the foreign exchange crisis or financial crisis might be approaching.

Following the 'Emergency Macroeconomic and Financial Meeting,' Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated, "The government will mobilize all available means considering market conditions," and emphasized, "We will strictly adhere to the principle of responding firmly and swiftly when necessary." He also stressed, "We plan to actively respond to one-sided speculative behaviors betting on the rise of the exchange rate."

However, some analyses suggest that the depreciation of currency values due to the 'king dollar' is a problem faced by all countries and is not a level to be overly concerned about.

Maurice Obstfeld, a professor at UC Berkeley, said at a press conference during the 'G20 Global Financial Stability Conference' the day before, regarding the recent sharp rise in the won-dollar exchange rate, "This phenomenon is not so much a weakness of the won but rather a strengthening of the dollar due to U.S. interest rate hikes." He added, "Looking at the real effective exchange rate against trading partners from 2010 to the present, the current won value is not particularly low," and assessed, "Korea remains a good investment destination, and the risk of capital outflow is not significant."