[Anchor]
As the Federal Reserve has shifted toward raising interest rates despite opposition from Trump, considerable impacts are expected for South Korea as well. A "butterfly effect" could unfold across exchange rates, the domestic stock market, and interest rates.
Reporter Kim Beom-joo breaks down what we need to watch closely.
[Reporter]
Take a look at the movement of the won-dollar exchange rate early this morning (September 17).
The Fed raised interest rates at 3:00 AM, and the initial reaction was calm because it was already anticipated.
However, 30 minutes later, when Chair Warsh began speaking at a press conference, the exchange rate started to climb sharply.
Hearing strong remarks suggesting that inflation would be brought down quickly and that things would not go the way President Trump wanted, market sentiment spread that U.S. interest rates could rise further, prompting a rush to buy dollars.
With a situation where simply buying U.S. government bonds for the time being guarantees regular returns of around 5 percent, some investors have decided to head for the safety of the U.S. rather than take risks investing in Korea.
So, what is the direct impact on the general public?
The most immediate concern is inflation.
If the dollar rises, the prices of imported goods—ranging from food supplies like flour and cooking oil that must be purchased from abroad in dollars to oil, steel, and more—refuse to come down.
This makes it difficult for prices to stabilize.
This subsequently leads to worries over loan interest rates.
Following today's hike, the U.S. benchmark interest rate is now 1 percentage point higher than South Korea's.
If the U.S. raises rates further on its own from here, the possibility of capital outflow increases.
Furthermore, because inflation must also be reined in, the pressure on the Bank of Korea to eventually raise interest rates grows.
However, bank mortgage interest rates have already risen by 1 percentage point compared to the beginning of the year.
Consequently, for those carrying a debt of 300 million won, monthly interest payments have increased by 200,000 won, requiring them to pay 1.6 million won a month including principal. If interest rates jump further from here, heavily indebted individuals will face increasingly difficult times.
Looking further ahead, if the burden grows on U.S. artificial intelligence companies that have taken on massive debt to invest, the semiconductor boom could also be affected.
Like a butterfly effect, the Fed's decision across the Pacific can trigger significant ripples throughout the daily lives of our citizens.
(Video editing: Cho Moo-hwan, Design: Seo Seung-hyun)
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