On the morning of the 26th, it rose to 1465.50 won during trading
Won-Dollar exchange rate expected to rise until the first half of next year
The won-dollar exchange rate surpassed 1,465 won during the session, marking the highest level in 15 years.
On the morning of the 26th, the won-dollar exchange rate exceeded 1,465 won. Dealers are working in the dealing room at the Hana Bank headquarters in Euljiro, Seoul, while exchange rates and other indices are displayed on the electronic board. Photo by Heo Young-han
On the morning of the 26th, in the Seoul foreign exchange market, the won-dollar exchange rate was trading at 1,462.60 won as of 11:10 AM. The exchange rate opened at 1,455.2 won, down 1.2 won from the previous trading day's closing price (3:30 PM), then increased steadily, soaring to 1,465.50 won around 10:21 AM. This is the first time in 15 years and 9 months that the exchange rate has risen to the 1,460 won level during intraday trading, since March 16, 2009 (1,488.50 won) amid the global financial crisis.
The won-dollar exchange rate has been rising due to the dollar's strength following the election victory of U.S. President-elect Donald Trump. Additionally, as the U.S. recently hinted at slowing down the pace of interest rate cuts, policy uncertainty increased, strengthening the dollar. The dollar index, which was around 106-107 earlier last week, rose to the low 108 range as of this day.
Concerns over prolonged domestic political uncertainty also added pressure. On the 24th, the Democratic Party of Korea announced plans to push for the impeachment of Acting President Han Deok-soo, stating that the final decision on impeachment would depend on whether a constitutional court justice nominee is appointed by the morning of the 26th. If Acting President Han does not appoint the nominee, the impeachment vote could take place as early as the 28th.
There are forecasts that the won-dollar exchange rate will continue its upward trend at least through the first quarter of next year. It is assessed that it will be difficult for the won to strengthen (exchange rate to fall) as long as the dollar remains strong and political uncertainty is not resolved.
Moon Da-woon, a researcher at Korea Investment & Securities, said, "During the process of handling the impeachment bill, the inherent downward pressure on the won is expected to continue at least until the first quarter of next year," adding, "Not only the political instability itself but also weakened negotiation power due to the lack of leadership in our government during the early Trump administration, downward revisions of Korea's economic growth outlook for next year, and the slow narrowing of the Korea-U.S. interest rate differential are likely to stimulate the won's weakness pressure."
Kwon Ah-min, a researcher at NH Investment & Securities, also said, "As expectations for U.S. interest rate cuts retreat, the dollar index is expected to maintain a firm trend at least through the first half of next year," adding, "The won's weakness pressure linked to the dollar's strength is likely to continue at least until the first half of next year."
There are also projections that the won-dollar exchange rate could rise to the 1,500 won level.
Park Sang-hyun, a researcher at iM Securities, said, "Considering the heightened policy risks since President Trump's inauguration and the increased uncertainty in the impeachment political situation centered on Acting President Han recently, the exchange rate will face upward pressure from January through the first half of next year," adding, "Taking into account the policy uncertainties of Trump's second term, domestic political uncertainty, and the possibility of a base rate cut in January next year, the won-dollar exchange rate could rise to 1,500 won in early next year."
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