Exchange Rate Breaks 1,410 Won, Possibility of Rising to 1,450 Won Range

Won-Dollar Exchange Rate Surpasses 1410 Won
Highest Level in 2 Years Since November 2022
Short-Term Possibility of Reaching 1450 Won Range

Seoul Euljiro Hana Bank Dealing Room.

The won-dollar exchange rate broke through the 1,410 won level during the session, reaching its highest point in two years, raising growing interest in the possibility of further increases. The market expects that due to heightened concerns over U.S. protectionism, the exchange rate could rise to around 1,450 won in the short term. However, if the exchange rate rises too quickly, it could stimulate inflation and delay interest rate cuts, leading to significant side effects, increasing the likelihood of intervention by foreign exchange authorities.

Exchange Rate Surges Daily Amid Concerns Over Trump’s Protectionism

On the 13th at the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,410.0 won, up 6.5 won from the previous trading day. This is the highest level since November 7, 2022, about two years ago, based on the opening price. During the session, the won-dollar exchange rate briefly rose to 1,411 won and was trading at 1,409.0 won as of 9:43 a.m.

The won-dollar exchange rate has been continuously hitting new highs since former President Donald Trump won the recent U.S. presidential election. The dollar is strengthening amid expectations that trade conflicts worldwide could worsen due to the protectionist policies of the second Trump administration. The Dollar Index, which reflects the value of the dollar against six major world currencies, reached 106, its highest level in about five months, on this day.

According to U.S. local media, Trump is expected to appoint hardliners against China and immigration to key positions such as Secretary of State, Secretary of Homeland Security, and Secretary of the Treasury. Concerns are growing domestically that the Trump administration’s America-first stance and anti-China, anti-immigration policies could trigger inflation again.

The market believes that concerns over Trump’s policies could push the exchange rate to rise at least to the 1,420 won range and possibly as high as the 1,450 won range.

Woori Bank forecasted that the won-dollar exchange rate could rise to the 1,420 won range this month. Min Kyung-won, an economist at Woori Bank, said, "Concerns that Trump’s trade policies will negatively impact the growth of major countries such as Europe and China are leading to weakness in the euro and yuan, supporting a strong dollar rally," adding, "The won is expected to weaken for the time being."

Yuanta Securities also predicted the 1,420 won range. Kim Ho-jung, a researcher at Yuanta Securities, said, "The recent rise in the exchange rate is largely influenced by Trump’s trade policies, and not only the won but also the currencies of major countries excluding the U.S. are weakening," adding, "We expect the upper limit to reach 1,420 won by the end of the year."

Short-Term Rise Possible Up to 1,450 Won

NH Investment & Securities projected the short-term upper limit of the won-dollar exchange rate at 1,450 won. They expect concerns over protectionism from the second Trump administration to persist for some time. However, they assessed that it would be difficult for the rate to rise beyond that because foreign exchange authorities are likely to intervene strongly if the exchange rate surges. As the exchange rate rises, import prices increase, which can stimulate domestic consumer prices and cause side effects such as delaying the Bank of Korea’s interest rate cuts due to inflation concerns, making it highly likely that the government will respond to exchange rate volatility.

Kwon Ah-min, an economist at NH Investment & Securities, said, "Despite the U.S. lowering its benchmark interest rate, the dollar continues to strengthen due to rising inflation concerns following Trump’s election," adding, "However, foreign exchange authorities are likely to intervene strongly above the 1,400 won level, which could limit the short-term upper bound." Lee Min-hyuk, an economist at KB Kookmin Bank, also forecasted, "Additional sharp rises will be difficult due to export companies’ dollar selling (nego) based on the perception of a high exchange rate and caution over foreign exchange authorities’ intervention."

Concerns are also growing that the exchange rate could become fixed in the 1,400 won range. If the U.S. exceptionalism, where only the U.S. economy thrives alongside the America-first policy of the second Trump administration, strengthens, the 1,400 won range exchange rate could become the new normal.

Park Sang-hyun, a senior advisor at iM Securities, explained, "Concerns over Trump’s signature tariff policy are likely to support a strong dollar for some time," adding, "It is necessary to keep open the possibility of fluctuations or further rises around the 1,400 won level until Trump officially takes office in January next year."