[Anchor]

Despite record-high exports leading to an increased inflow of foreign currencies like the U.S. dollar, the exchange rate is actually rising.

Lee Tae-gwon reports on why this is happening.

[Reporter]

The won-dollar exchange rate soared to as high as 1,559 won at one point yesterday (July 1).

Although it fell slightly following suspected intervention by foreign exchange authorities, it closed the daytime trading session at 1,554 won, up 5.5 won.

This marks the highest level in 17 years and three months since March 5, 2009, during the global financial crisis.

The average exchange rate for the first half of this year was 1,484 won, the highest since the first half of 1998, which was 1,498 won during the Asian financial crisis.

Authorities have introduced measures such as the RIA (Resident Individual Account) to encourage the return of retail investors investing abroad and have injected 45.3 billion dollars into the market over six quarters to intervene, but these efforts have been insufficient to stop the rise in the exchange rate.

[Jeon Kyu-yeon / Research Analyst at Hana Securities: Since we cannot keep using our foreign exchange reserves indefinitely, interventions must be meaningful. However, even when we do intervene, it only serves to cap the upper limit...]

The primary reason cited is the surge in demand for dollars as foreign investors significantly adjust their portfolios amid the domestic stock market boom.

Foreigners net sold 150 trillion won in the KOSPI market during the first half of the year alone, and they have continued to net sell for nine consecutive trading days recently.

Following the Nvidia craze, investment fervor toward the U.S. market, including SpaceX and high-leverage semiconductor products, shows no signs of cooling down.

Over the past year, South Korea recorded a current account surplus of 177.9 billion dollars. However, with domestic investment abroad reaching 112.1 billion dollars and foreign net selling of stocks totaling 44.8 billion dollars, the net supply of foreign currency was only 21 billion dollars.

[Min Gyeong-won / Economist at Woori Bank: South Korea is no longer a country where the foreign exchange market supply and demand depend solely on the current account; the dollar figures in the financial market have become much more important. This is because there will be far more dollars coming in through the financial account.]

Recently, the strong dollar phenomenon, triggered by signals of interest rate hikes in the U.S., has also compounded the situation.

Analysts suggest that as the yen-dollar exchange rate hit a 40-year high of 162 yen, the weakness of the won has intensified, as it is often grouped with other Asian currencies.

With layers of external factors that the government cannot control, forecasts suggest that the structural weakness of the won will persist.

Reported by Lee Tae-gwon | Video by Park Jin-ho | Video Editing by Kim Jong-mi | Graphics by Jeon Yu-geun and Choi Jae-young