Political Instability Drives Exchange Rate Surge... Closes Above 1460 Won for the First Time Since Financial Crisis (Comprehensive)

Highest Level in 15 Years and 9 Months Since March 2009

The won-dollar exchange rate closed in the 1460 won range for the first time in 15 years and 9 months since the global financial crisis. This was due to the increased political uncertainty caused by the growing conflict between the ruling and opposition parties over the appointment of Constitutional Court justices.

Yonhap News

On the 26th, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1464.8 won, up 8.4 won from the previous trading day, based on the weekly closing price. This is the highest weekly closing price since March 13, 2009 (1483.5 won), marking the highest level in 15 years and 9 months.

On that day, the exchange rate opened at 1455.2 won and rose to 1465.50 won around 10:21 a.m. After fluctuating between 1461 and 1465 won, the rate surged again to 1466.0 won around 3:20 p.m. This intraday high is the highest since March 16, 2009.

The exchange rate's rise was further fueled by Prime Minister and Acting President Han Deok-su's announcement to withhold the appointment of Constitutional Court justices. Acting President Han stated in an emergency national address at the Government Seoul Office that the appointments would be withheld until the ruling and opposition parties reach an agreement and submit a proposal. In response, the opposition party, the Democratic Party, immediately opposed this move, filing an impeachment motion against Acting President Han and announcing plans to vote on it on the 27th.

A strong dollar also contributed to the rise in the exchange rate. The Dollar Index, which measures the value of the dollar against six major currencies, has been fluctuating around the 108 level since last week.

Major Asian currencies are also showing weakness. The yen-dollar exchange rate is trading in the 157 yen range, and the yuan-dollar exchange rate is trading around 7.29 yuan.

Jeon Gyu-yeon, a researcher at Hana Securities, said, "In the first half of next year, the won-dollar exchange rate is likely to rise further due to U.S. exceptionalism and intensified trade disputes during Trump's second term." He added, "If the exchange rate does not stabilize, it is necessary to consider the possibility of the exchange rate reaching the 1500 won range next year."