September Exchange Rate Hits New High 11 Times... King Dollar's Unstoppable Momentum

Won-Dollar Exchange Rate Surges to 1440 Won on the 28th
Continuous Record Highs... Unstoppable Momentum After Breaking 1400 Won
Major Currencies Like Yuan and Pound Plummet

On the afternoon of the 28th, when the won/dollar exchange rate surpassed 1,440 won during the trading session, an employee was working in the dealing room of Hana Bank in Jung-gu, Seoul. [Image source=Yonhap News]

The won-dollar exchange rate surpassed 1,440 won on the 28th, setting a new record high once again. This marks the 11th time this month that the record high has been broken. Amid ongoing aggressive tightening by the United States, the rapid depreciation of major currencies such as the British pound and Japanese yen, and the prolonged Ukraine-Russia war, the preference for the dollar is increasingly growing.

According to the Seoul foreign exchange market on the 28th, the won-dollar exchange rate rose to 1,440 won around 11:20 a.m., marking a new record high. This is the highest level in about 13 years and 6 months since March 16, 2009 (1,488.0 won) based on the intraday high. Afterward, the exchange rate briefly dropped to the 1,438 won range but rose again past 1,440 won in the afternoon and continued its upward trend.

This month, the won-dollar exchange rate has broken record highs 11 times based on intraday highs: on the 1st (1,355.1 won), 2nd (1,363.0 won), 5th (1,375.0 won), 6th (1,377.0 won), 7th (1,388.4 won), 14th (1,395.5 won) 15th (1,397.9 won) 16th (1,399.0 won), 22nd (1,413.4 won), 26th (1,435.4 won), 28th (1,440 won).

After surpassing 1,400 won on the 22nd, it broke through 1,440 won in less than a week, raising the upper limit. The dollar index (DXY), which shows the value of the dollar against six major currencies, rose to 114, marking the highest level in 20 years, intensifying the strong dollar trend. As a result, the stock market was hit hard. The KOSPI fell nearly 3%, dropping to the 2,150 level, and the KOSDAQ also plunged more than 3.4%, breaking below the 680 level.

The won-dollar exchange rate is expected to continue its high-level rally for the time being. Although foreign exchange authorities are defending the exchange rate through dollar sales, verbal interventions, and currency swaps with the National Pension Service, they have been unable to stop the upward trend. Since most major currencies other than the dollar are weakening, it is analyzed that it will be difficult to change the flow.

An employee is organizing US dollars at the Counterfeit Response Center of Hana Bank Headquarters in Euljiro, Jung-gu, Seoul.
[Photo by Yonhap News]

The sharp rise in the exchange rate on this day appears to have been greatly influenced by the yuan's sharp decline during the day amid concerns about China's economic slowdown. In the Hong Kong offshore market, the yuan is trading at around 7.22 yuan per dollar. When the yuan depreciates against the dollar, the won also falls together. In particular, the People's Bank of China, the central bank, announced the yuan's reference exchange rate against the dollar at 7.1107 yuan, up 0.0385 yuan from the previous trading day, which further shocked the market.

The pound's value against the dollar is also falling sharply. The pound is trading at around 1.066 dollars, the lowest level in 37 years and 6 months since March 8, 1985 (1.064 dollars). Although the Bank of England (BOE) has signaled large-scale interest rate hikes and intervened to defend the exchange rate, the outlook for depreciation remains. Additionally, with Russia warning of the suspension of the Ukraine pipeline operation and the explosion of the Nord Stream gas pipeline node, the euro is also showing a downward trend, fueling the rise in the won-dollar exchange rate.