[Yoon Seok-yeol Impeachment] "Exchange Rate Hits Short-term Low of 1430 Won... Attention on Speed to Reach 1410 Won if Further Decline Occurs"

'Trump Tariffs' Also a Key Factor
Negotiation Strategies Are Crucial

On the 4th, experts expressed that the rise in the value of the Korean won, reflecting the removal of political uncertainty for the time being, will be reflected in the foreign exchange market. They viewed the short-term bottom of the won-dollar exchange rate at 1,430 won. It is forecasted that the downward volatility will vary depending on the speed of reaching the 1,410 won level if there is an additional decline thereafter.

Yonhap News

On that day, the won-dollar exchange rate opened at 1,450.5 won, down 16.5 won from the previous weekly closing price, reflecting the global dollar weakness caused by the US mutual tariff shock, and widened its decline, currently moving in the high 1,430 won range as of 2 p.m.

Min Kyung-won, a researcher at Woori Bank, said, "The market is interpreting the impeachment acceptance as the resolution of political uncertainty," adding, "In the short term, attention should be paid to whether the 1,430 won level is breached downward." Min also noted, "While the ruling was delayed longer than the market expected, which consolidated both support and opposition opinions, this is more of a social issue than a market impact, and it depends on how well public authority controls it." Baek Seok-hyun, an economist at Shinhan Bank, also explained, "Although conflicts among support groups may continue, the impact on the foreign exchange market will be limited."

Experts believe that how quickly the exchange rate falls to the 1,410 won level in the event of an additional decline will determine the future movement of the won-dollar exchange rate. If it falls quickly, exporters and overseas investors alike may sell the dollars they hold due to the psychological burden of 'it could fall further,' which could increase downward volatility. Otherwise, a sideways market around the low 1,400 won level may continue.

Meanwhile, not only domestic factors but also external factors led by the 'Trump tariffs' are key elements increasing exchange rate volatility. Experts forecast that, given the receipt of a higher-than-expected 25% mutual tariff notice, how negotiation strategies are formulated going forward will become a major variable in the foreign exchange market. Since the US postponed the application date of tariffs by country to April 9, there is sufficient room for negotiation. Researcher Min said, "China learned from Trump's first term and, considering that what it ultimately wants is US investment, it is expected to use blocking its own companies' investment in the US as a bargaining chip," adding, "How Korea handles negotiations will also be very important."