Won-Dollar Rate Drops 10.7 Won to Mid-1,450s on Strong Market Stabilization Commitment by FX Authorities (Update)

Weekly Close at 1,457 Won, First Drop in Four Sessions
Foreign Exchange Authorities Intervene Verbally After a Month; Fact Sheet Plays a Role
Intraday Fluctuation Hits 22.9 Won, Largest in Six Months

The won-dollar exchange rate, which had been on a strong upward trend for two consecutive days, closed sharply lower due to the foreign exchange authorities’ strong commitment to market stabilization.

On the 14th, a dealer is working in the dealing room at the Shinhan Bank headquarters in Seoul. Photo by Shinhan Bank

On November 14, in the Seoul foreign exchange market, the won-dollar exchange rate closed weekly trading at 1,457.0 won as of 3:30 p.m., down 10.7 won from the previous trading day. This marked the first time in four days, since November 10, that the weekly closing price ended lower.

The exchange rate opened at 1,471.9 won, up 4.2 won from the previous day, and surged to 1,474.9 won within 10 minutes, continuing the upward momentum that had persisted since November 11.

However, around 9 a.m., following a market stabilization message from the foreign exchange authorities, the rate immediately dropped by nearly 19 won, plunging to the mid-1,450 won range. The rate further fell to as low as 1,452.0 won at one point after it became known that the joint fact sheet on the Korea-U.S. customs negotiations included a separate section on “foreign exchange market stabilization.”

Despite foreign investors’ net selling of 2.3473 trillion won in the domestic stock market, the upward pressure on the exchange rate was limited.

The intraday fluctuation reached 22.9 won, the largest in about six months since May 2, when it was 34.7 won. The dollar index (DXY), which measures the value of the dollar against the currencies of six major countries, fell 0.38% from the previous day to 99.176.

Meanwhile, the Ministry of Economy and Finance, the Bank of Korea, and other foreign exchange authorities effectively engaged in verbal intervention during a morning market monitoring meeting, emphasizing their determination to stabilize the foreign exchange market. They expressed concerns about the growing uncertainty in the foreign exchange market, with the won-dollar rate exceeding 1,470 won at one point. They stated, “The entrenched expectations among market participants for a weaker won could significantly affect the downward rigidity of the exchange rate,” and pointed out, “It is necessary to actively utilize all available tools to respond.”

In particular, they announced plans to discuss measures to stabilize the exchange rate in cooperation with the National Pension Service and other entities. The participants emphasized, “We will thoroughly analyze the causes of the exchange rate increase to ensure the stability of the national economy and the financial and foreign exchange markets,” and added, “We plan to closely consult with major market participants such as the National Pension Service and exporters to devise exchange rate stabilization measures.”