Soaring Exchange Rate Falls to 1,300-Won Range... Lowest in 11 Months

[Anchor]

The won-dollar exchange rate plummeted to the 1,380-won range overnight. The drop is driven by a weaker U.S. dollar amid expectations that the U.S. will not raise interest rates before the election, along with rising demand for the won as domestic companies convert export-earned dollars into Korean currency.

Reporter Lee Tae-gwon has the details.

[Reporter]

Starting the day at 1,413 won at 6:00 a.m., the won-dollar exchange rate continuously expanded its losses to record 1,397 won by 3:30 p.m.

This marks the first time the exchange rate has broken below the 1,400-won threshold in 10 and a half months, hitting its lowest level since September 24 of last year.

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

Analysts attribute this decline to incoming funds related to the ADR, coupled with surging demand by booming export companies, such as semiconductor firms, to convert dollars into won ahead of interim corporate tax payments due at the end of this month.

[Lee Min-hyuk / Economist, KB Kookmin Bank: Among exporters, particularly semiconductor companies, there is quite strong dollar-selling pressure. Because they also need won-denominated funds for domestic investments like building semiconductor clusters, they are releasing some of the dollar holdings they previously had....]

The dollar's weakness, fueled by growing expectations that the U.S. will not raise its benchmark interest rate next month due to economic slowdown concerns, also had an impact.

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

While a falling exchange rate lowers import prices, a steep decline could increase management uncertainties for export companies, such as exchange rate losses.

While the market leaves open the possibility of further declines in the exchange rate, analysts note that variables such as increased dollar demand from future investments in the U.S. and concerns over Middle East-driven oil price hikes could act as influencing factors.

(Video 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.