On the 2nd, the KRW/USD exchange rate fluctuated by more than 30 won within a single day, dropping to its lowest level since the 12·3 Martial Law incident in December of last year. The volatility in the exchange rate was amplified by a combination of expectations that the US-China trade conflict would ease, political instability in the domestic situation, and last-minute selling ahead of a long holiday.
As the first-ever case in constitutional history where the acting president's authority was delegated multiple times, uncertainty in the domestic economic situation increased. On the 2nd, the status board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul displayed the KOSPI and KRW/USD exchange rate. On that day, the KOSPI opened at 2,556.52, down 0.09 points from the previous session, and the KRW/USD exchange rate started the session at 1,436.5 won, up 15.5 won. 2025.5.2 Photo by Cho Yongjun
On this day, the weekly closing price (as of 3:30 p.m.) of the KRW/USD exchange rate in the Seoul foreign exchange market ended at 1,405.3 won, down 15.7 won from the previous trading day. This is the lowest level in five months since December 3 of last year (1,402.9 won), the day of the Martial Law incident.
The exchange rate opened at 1,436.0 won, up 15.5 won from the previous session's close, and surged to 1,440.0 won in the early session. This was due to heightened domestic political instability after former Prime Minister Han Ducksoo and former Deputy Prime Minister and Minister of Economy and Finance Choi Sangmok both resigned the previous day.
However, in the afternoon, the exchange rate fell below 1,430 won and reversed its earlier gains, dropping to as low as 1,403.5 won before closing slightly higher at 1,405 won just before the market closed. The fluctuation between the weekly low and high reached 34.7 won, the largest since November 11, 2022 (37.4 won).
The afternoon reversal in the exchange rate appears to reflect optimism that the US-China trade conflict will ease. On this day, a spokesperson for China's Ministry of Commerce stated, "The US side has recently sent active messages to China several times through relevant departments, expressing a desire to engage in dialogue with China," adding, "We are currently evaluating this."
Additionally, as domestic and external uncertainties have recently increased, investors actively sold dollars ahead of the long holiday from the 3rd to the 6th, which also exerted downward pressure on the exchange rate.
Meanwhile, as of 3:30 p.m., the KRW/JPY cross rate stood at 968.30 won per 100 yen, down 28.47 won from the previous session's reference price. The JPY/USD exchange rate rose by 1.82% to 145.112 yen. The dollar index (DXY), which measures the value of the US dollar against the currencies of six major countries, was at the 99.872 level.
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