[Setting Sun of King Dollar]② Is It Still a Good Time to Buy... Gold and Dollar Investment Strategies

"At Present, Dollar Buying Is Not Recommended... Be Cautious with Gold Investment Too"

[Asia Economy Reporters Jehoon Yoo, Aeri Boo] As the era of the US dollar's dominance comes to an end, financial consumers are increasingly concerned about safe asset investments. Experts advise that since the exchange rate is still at a high level to buy US dollars, it is necessary to find a breakthrough through foreign currency time deposits and other means. They also emphasized the need for caution when investing in gold, which is emerging as an alternative.

Experts believe that buying US dollars at this point is ineffective. Expectations are growing that the US Federal Reserve (Fed) will conclude interest rate hikes at the upcoming Federal Open Market Committee (FOMC) meeting and may even cut rates within the year, making it unlikely that the king dollar trend will reappear in the near term.

Jung Sung-jin, Deputy Head of KB Kookmin Bank Gangnam Star PB Center, said, "Although the won-dollar exchange rate is lower than the 1,400 won level recorded around October last year, it is still at a high level. I believe the appropriate won-dollar exchange rate is between 1,050 and 1,200 won. If you want to invest in foreign exchange, I recommend buying below 1,150 won and selling at the 1,200 won level."

Should investors who bought US dollars at relatively high levels last year cut their losses? Experts analyze that losses can be partially recovered through foreign currency time deposit products at commercial banks. In fact, the one-year foreign currency time deposit interest rates at major commercial banks are ▲Shinhan Bank foreign currency time deposit 4.788% ▲Hana Bank foreign currency time deposit 4.48%, which are higher than won time deposit products that have fallen to the 3% range.

Kim Hak-soo, PB Team Leader at Hana Bank Jamwon Branch, explained, "There was a buying trend when some analyses suggested the won-dollar exchange rate could rise to the 1,600 won level, but rather than cutting losses, considering foreign currency time deposit products is advisable. Some products even offer interest rates in the 5% range, and operating a one-year time deposit product with a 5% rate can compensate about 60 won per dollar in terms of exchange rate."

Although the era of the king dollar is fading, what about the Japanese yen, another safe asset? As of the 25th, the yen deposit balance at the five major banks was 742.1 billion yen, up 1.5% from the previous month. The yen has also shown a steady increase since the end of last year. However, many opinions suggest caution with yen investments as well. A commercial bank official said, "The won-yen exchange rate is in the 700 won range, and unless it rises to the 1,200?1,300 won range in the future, it is difficult considering the current exchange rate (953.21 won as of the 26th). The recent increase in yen deposits is interpreted as due to secondary demand such as travel."

In the context of the king dollar's decline, expectations for gold investment are not high. Although gold prices are on an upward trend, they have reached a high point, and unlike stocks or bonds, gold does not pay dividends or interest. Baek Seok-hyun, an economist at Shinhan Bank, said, "Domestic gold prices are influenced by international gold prices as well as exchange rates. Even if international gold prices rise, it can be offset by a decline in the exchange rate. On the other hand, since international gold prices are judged to have reached a historical high, it is not attractive as a short-term investment."