LS Securities on the 3rd assessed that, from a depreciation-rate perspective, it is hard to view the current rise in the won-dollar exchange rate—which has recently climbed past 1,500 won—as a crisis.
Regarding market comparisons of the latest exchange-rate rise with the rate during the IMF foreign exchange crisis, LS Securities said, "A simple comparison is difficult, but if we apply the same depreciation rate and calculate based on the Mar. 31 rate of 1,445 won, the exchange rate during the IMF foreign exchange crisis is estimated to have risen to as high as 3,363 won, and during the global financial crisis to 2,565 won," adding, "There is a large difference from the current level."
However, it noted as a problem that the trough level of the exchange rate during crises has been gradually rising. LS Securities said, "The trough was 844 won during the foreign exchange crisis, 1,155 won during the COVID-19 period, and 1,306 won during the martial law period, and it has been rising," adding, "The baseline exchange-rate level of the Korean won itself has been continuously increasing."
This is assessed to mean that the fundamentals of the Korean economy are gradually weakening. LS Securities said, "What matters more than a short-term decline in the exchange rate driven by events is that, structurally, the strength of the Korean economy is weakening."
As for the possibility of a pullback in the exchange rate, it cited the hearing scheduled for Apr. 13 as a key variable. LS Securities projected, "If meaningful comments emerge at the hearing regarding relaxation of the SLR regulation, dollar weakness could appear and act as a trigger for a decline in the won-dollar exchange rate."