'King Dollar' Breaks Monthly Exchange Rate Record 11 Times

Previous Day USD-KRW Exchange Rate Surpasses 1440 Won
Most Major Currencies Weaken
Despite Various Measures by Foreign Exchange Authorities
High Exchange Rate Trend Difficult to Reverse

On the 29th, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index opened at 2197.75, up 28.46 points (1.31%) from the previous trading day. The won-dollar exchange rate opened at 1424.5, down 15.4 won. Photo by Moon Honam munonam@

[Asia Economy Reporters Seo So-jeong and Moon Je-won] The won-dollar exchange rate has surged, breaking its monthly high 11 times this month alone. As fears of aggressive U.S. monetary tightening swept the market, the exchange rate surpassed the psychological barrier of 1,400 won on the 22nd and then quickly jumped past the 1,440 level in less than a week. Despite foreign exchange authorities in South Korea and other countries continuously implementing market stabilization measures to defend the exchange rate, it seems difficult to reverse the trend of the "King Dollar" (the dollar's extreme strength).

According to the Seoul foreign exchange market on the 29th, the won-dollar exchange rate stood at 1,433.3 won as of 10 a.m. The rate opened at 1,424.5 won, down 15.4 won from the previous trading day, rose to 1,435.0 won around 9:28 a.m., and has since fluctuated around the 1,430 won level. The Bank of England (BOE) took out the option of purchasing government bonds overnight, calming the pound's collapse, and China's monetary authorities are pushing to reintroduce the "economic response adjustment factor," which has partially restored risk asset preference sentiment.

With the pound shock somewhat easing, the previously relentless rise in the won-dollar exchange rate showed signs of moderation today, but the upward pressure on the exchange rate remains. Particularly concerning is that amid the ongoing global strong dollar trend, the won's depreciation this month has been steeper compared to other Asian currencies. According to the foreign exchange market, the depreciation rates against the dollar this month are won (-7.11%), yuan (-4.31%), and yen (-3.64%), with the won's decline being notably pronounced. The speed of the won's depreciation is the second fastest since the 2008 global financial crisis.

The previous day, the won-dollar exchange rate broke the 1,440 won mark again, setting a new monthly high for the 11th time this month. The won-dollar exchange rate reached new highs during intraday trading 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), and 28th (1,442.2 won), totaling 11 times. The won-dollar exchange rate is expected to continue its high-level rally for the time being. Foreign exchange authorities are deploying all available measures, including dollar sales, verbal interventions, foreign exchange swaps with the National Pension Service, and government bond purchases, but it is difficult to find clear grounds to change the trend.

Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "Today, the won-dollar exchange rate is partially retracing the previous day's rise as foreign investors continue to sell in the stock market, maintaining supply-demand instability," adding, "With the government injecting large-scale funds amid panic in the government bond market, bond yields have sharply fallen today." Researcher Oh added, "Given the global strong dollar trend, I expect the won-dollar exchange rate to break 1,500 won by the end of the year. However, since it is difficult to change the trend, when market volatility expands, the government's role in calming anxiety and controlling volatility by intensifying intervention will be key to stabilizing the exchange rate."