Won-Dollar Exchange Rate Surges 14.6 Won... Dollar Rises Amid International Oil Price Increase

[Image source=Yonhap News]

The won-dollar exchange rate surged by 14.6 won due to rising international oil prices and the weakening of Asian currencies.

In the Seoul foreign exchange market on the 3rd, the won-dollar exchange rate closed at 1,316.5 won, up 14.6 won from the previous trading day.

On that day, the exchange rate started at 1,306.2 won, up 4.3 won from the previous day, rose above 1,320 won during the session, and then declined slightly before the market closed.

The sharp rise in the exchange rate is interpreted as a result of the dollar strengthening amid a significant increase in international oil prices following news of oil production cuts by major oil-producing countries, despite stable U.S. inflation.

Earlier, OPEC Plus (+), a coalition of major oil-producing countries, announced on the 2nd (local time) a voluntary additional production cut of 1.16 million barrels per day.

Subsequently, West Texas Intermediate (WTI) crude oil soared 8%, reaching its highest intraday level in a year. The previously stable oil price rose to $81 per barrel.

The rise in oil prices not only exerts upward pressure on domestic and international inflation but can also widen South Korea's trade deficit, negatively affecting exchange rate stability.

The dollar index, which indicates the value of the dollar against the currencies of six major countries, rose to 102.83.

Additionally, the weakening of the Chinese yuan amid escalating U.S.-China technology conflicts also contributed to the rise in the won-dollar exchange rate.

Amid increasing U.S. pressure on Chinese semiconductors, tensions escalated as China announced it would conduct a cybersecurity review of products from the U.S. memory semiconductor company Micron for national security reasons the previous day.

However, after the exchange rate surpassed 1,320 won, the upward momentum slowed somewhat as export companies released large volumes of negotiation (dollar selling) orders.