Won-Dollar Exchange Rate Plummets to 1,300-Won Range, Lowest in 11 Months

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The won-dollar exchange rate, which once soared above the 1,500-won range, has dropped to the 1,390-won range, hitting its lowest level in about 11 months. This is attributed to growing expectations that the U.S. Federal Reserve will freeze its benchmark interest rate, along with an increase in demand for won conversions by semiconductor export companies.

Reporter Lee Tae-gwon has the details.

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Opening at 1,413 won at 6:00 AM, the won-dollar exchange rate continued to expand its losses, recording 1,397 won by 3:30 PM.

This marks the first time the 1,400-won threshold has been breached in ten and a half months, and the lowest level since September 24 of last year.

The won-dollar exchange rate hit a year-to-date high of 1,555 won based on the weekly closing price early last month, but fell below the 1,500-won mark following SK Hynix's American Depositary Receipt (ADR) listing in the U.S., showing a steady downward trend since.

Analysts attribute this to an influx of ADR-related funds combined with a surge in demand from booming semiconductor and other export companies converting dollars into won for upcoming corporate tax interim payments at the end of this month.

[Lee Min-hyuk / Economist, KB Kookmin Bank: With heavy dollar selling pressure centered particularly on semiconductor firms among exporters, and a need for won funds for domestic investments such as the creation of semiconductor clusters, they are releasing some of the dollar holdings they previously held....]

The weakening of the dollar also had an impact, as growing concerns over an economic slowdown lent weight to expectations that the U.S. will not raise interest rates next month.

[Baek Seok-hyun / Economist, Shinhan Bank: A month ago, the possibility of a U.S. rate hike in September was just emerging, but recently that expectation is fading. Since Federal Reserve Chair Kevin Warsh is not giving decisive signals, I view this as a factor that could push the exchange rate down.]

While a lower exchange rate helps lower import prices, a steep decline can heighten management uncertainties for export companies, such as exchange rate losses.

While the market is keeping open the possibility of a further decline in the exchange rate, analysts suggest that variables such as increased demand for dollars resulting from future investments in the U.S. and concerns over rising oil prices stemming from the Middle East could act as key factors.

(Camera reporting: Kim Hak-mo, Video editing: Jung Yong-hwa, Design: Choi Jae-young, VJ: Jung Han-wook)
※ Please note: This article was translated by AI and may contain errors.