November Average Exchange Rate Surpasses 'Tariff Fear' April Levels... Year-End Outlook [Why&Next]

Concerns Mount Over Breakthrough of 1,500 Won, "Next Ceiling at 1,480 Won"
AI Bubble Theory Fuels Global Market Volatility... Continued Foreign Net Selling Possible
Expansion of Overseas Investments by Individuals and Corporations, US Investment Bur

This month, the average won-dollar exchange rate has soared past the levels seen in April, when concerns over the US-China tariff war were at their peak. Experts note that with the possibility of the won-dollar exchange rate surpassing 1,500 won still on the table, it is important to monitor whether the recent large-scale sell-off by foreign investors in the domestic stock market will continue, as well as the potential for heightened expectations of US monetary easing.

On the 7th, various indices were displayed on the index board in the dealing room of Hana Bank in Jung-gu, Seoul.

Average 1,444.1 won in the first week of November... Largest won depreciation among major currencies

According to the Economic Statistics System (ECOS) of the Bank of Korea on November 10, the average won-dollar exchange rate based on weekly closing prices (3:30 p.m.) from the beginning of November through the 7th was 1,444.1 won, surpassing the level seen in April (1,441.9 won). This is the result of the exchange rate rising by nearly 30 won this month. On the 7th, the weekly closing price of the won-dollar exchange rate reached 1,456.9 won, marking the highest level in about seven months since April 9 (1,484.1 won). During after-hours trading that day, the rate surged to 1,461.5 won, also reaching a new high compared to the after-hours closing price on April 9 (1,472.0 won). Last April was a period marked by lingering political uncertainty in Korea following the impeachment crisis and ahead of the early presidential election, while externally, concerns over the US-China trade war were at their peak. In the first week of November, the value of the won fell by 1.95% compared to the previous week based on after-hours closing prices. During the same period, the dollar index, which measures the value of the dollar against the currencies of six major countries, appreciated by 0.15%, meaning the won's depreciation was much larger.

The sharp rise in the won-dollar exchange rate this month was directly influenced by large-scale selling of domestic stocks by foreign investors. In just the first week of November, foreigners recorded a net sale of 7.2638 trillion won in domestic stocks. At the 2025 Asia-Pacific Economic Cooperation (APEC) Summit, major uncertainties such as tariffs and investments in the US were resolved, prompting a wave of profit-taking after the recent stock market rally. The market is concerned that the outflow of foreign funds will continue for the time being, increasing demand to convert won into dollars and further pushing up the exchange rate. Amid growing global stock market volatility due to the so-called artificial intelligence (AI) bubble, additional sell-offs could occur if risk aversion strengthens due to concerns about worsening US employment.

‘Seohak Ant’ Surge + US Investment Burden... Concerns Over Structural Entrenchment of High Exchange Rate

Structural factors putting downward pressure on the won have also come to the fore. The expansion of overseas investments by individual investors known as ‘Seohak Ants’ (Koreans investing in foreign stocks), domestic companies’ overseas investments, and the annual burden of about 20 billion dollars in US investments are cited as mid- to long-term factors that could entrench a high exchange rate.From January to September this year, the amount of overseas securities investments by residents reached 99.85 billion dollars, more than three times the amount of domestic securities investments by foreigners (29.65 billion dollars) during the same period. Lee Minhyeok, an economist at KB Kookmin Bank, pointed out, “The structure in which domestic dollar supply is rapidly flowing out due to overseas securities investments by Seohak Ants and pension funds, as well as direct overseas investments by companies, has become entrenched.” He also noted concerns that the ratio of net external assets to the size of the economy is higher than the equilibrium level, increasing downward pressure on the won.According to the Bank of Korea, Korea’s net external financial assets stood at 1.0304 trillion dollars as of the end of the second quarter this year.This is about 55% of gross domestic product (GDP), the second-highest level on record.

The annual 20 billion dollar investment in the US is also weighing on the exchange rate. While the government has emphasized that using foreign currency asset management profits and government-guaranteed bonds will limit the impact on the foreign exchange market, the market still sees the impact as inevitable. Choi Yechang, a researcher at Sangsangin Securities, said, “Even if the dollar outflow does not go through the spot foreign exchange market, a decrease in foreign exchange reserves can lead to a downgrade in national credit ratings and an expansion of foreign capital outflows. It is difficult to rule out the resulting indirect upward pressure on the exchange rate.” Depending on the policy-based funding method, short-term market shocks may be limited, but if the decrease in reserve assets accumulates, fundamental upward pressure on the exchange rate will be unavoidable. Other concerns include the potential hollowing out of domestic manufacturing due to large-scale investments and issues with the resilience of foreign exchange reserves if foreign currency asset management profits are diverted to US investments.

"Next Ceiling at 1,480 Won"... Authorities’ Intervention Watch Seen as Limiting Further Rise

In the market, concerns are growing that the won-dollar exchange rate could break through 1,500 won this year.With the rate having surpassed the 1,450 won level, the next ceiling is seen at 1,480 won. Moon Daun, a researcher at Korea Investment & Securities, raised his fourth-quarter exchange rate forecast from 1,390 won to 1,420 won, stating, "The US government shutdown, which was expected to be resolved in October, is dragging on, and expectations for Federal Reserve rate cuts have receded, keeping upward pressure on the dollar strong. With expectations for further won depreciation taking hold in the market, demand for selling dollars, including from exporters, has weakened significantly," he said. "The next meaningful ceiling is 1,480 won, which was reached during the martial law period."

However, concerns about authorities’ intervention and the burden of higher levels were cited as factors limiting further increases. Experts believethat a clear shift to a weaker dollar is needed for the upward trend in the exchange rate to subside. If expectations for Federal Reserve monetary easing spread again or if Korea’s strong export performance, especially in semiconductors, continues, the upward pressure on the exchange rate is expected to ease. However, it is forecast that, for the time being, the stable range for the exchange rate will remain around 1,400 won.