Won-dollar exchange rate

Won-dollar exchange rate, 1393.6 won… ‘1,400 won defense all-out war’ this week is the key

The won-dollar exchange rate continues to threaten the 1,400 won range, and it is hardly falling. In order to prevent the psychological shock when it crossed 1,400 won, the Korean authorities are making all-out efforts to defend the exchange rate, but the problem is that the US is likely to raise interest rates by 0.75 percentage points or more again on the 22nd. In this case, it is difficult to rule out the possibility of an interest rate inversion between Korea and the US and a faster dollar outflow.

Reporter Jung Eun-hye on the report.
[Report]

The won-dollar exchange rate, which started at 1,385 won today, ended at 1393.6 won. It is up 5.6 won from last week.

Although the government took a strong intervention last week,

Choo Kyung-ho / Deputy Prime Minister and Minister of Strategy and Finance (last 15th) said,
“There is an excessive concentration on one side or anxiety is spreading. .”

The exchange rate has started to rise again.

Last week, the exchange rate rose below the chin of 1,400 won for two days in a row, but the upward trend was dampened by the government’s massive selling of dollars.

Analysts say that they used the so-called ‘lunch bomb’ operation, which focused on releasing dollars before and after lunchtime when transactions were reduced, just as it did during the financial crisis.

The reason the authorities went all-out to defend the exchange rate is because they see 1,400 won as a psychological support level.

Seo Jeong-hoon / Senior Research Fellow, KEB Hana Bank
“The 1,400 won level is a signal to approach cautiously, reflecting concerns that the growth rate itself may fall sharply as the exchange rate level rises and exports become sluggish due to the strong dollar.”

The market’s attention is focused on two big events this weekFirst of all, the US Federal Reserve raises interest rates on the 22nd. Announcing the width, a minimum 0.75%p increase is likely.

It is highly likely that the inversion of Korea-US interest rates will push up the exchange rate. It is also noteworthy whether a currency swap will be made at the Korea-US summit.

Currency swap, which exchanges currencies between the two countries in case of emergency, is considered a currency exchange card. However, there is also an analysis that the effect will be negligible even if the agreement is signed with the prospect that the signing will not be easy.

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