The won-dollar exchange rate surged above 1,460 won in early trading, reaching its highest level since March 2009.
According to the Seoul foreign exchange market on the 26th, the exchange rate was trading at 1,463.9 won as of 10:12 a.m. On this day, the exchange rate opened at 1,455.2 won, 1.2 won lower than the previous transaction day's weekly closing price (as of 3:30 p.m.), and immediately rose above 1,460 won.
In the weekly transaction, the exchange rate exceeded 1,460 won for the first time since March 16, 2009 (1,488 won) during the global financial crisis. Before the financial crisis, the last instance was on March 20, 1998 (1,472 won) during the International Monetary Fund (IMF) foreign exchange crisis.
As political instability continues, the value of the won is plummeting. The opposition parties, including the Democratic Party, plan to handle the motion to appoint three constitutional court justice candidates recommended by the National Assembly at the National Assembly's plenary session held that day.
The Democratic Party has announced that they will propose an impeachment motion if Acting President Han Deok-su refuses to appoint the constitutional court justices. If the impeachment motion against Han is approved, Choi Sang-mok, the Deputy Prime Minister and Minister of Strategy and Finance, will take over the acting presidency according to regulations.
Externally, the trend of a strong dollar is fueling the rise in exchange rates. On the 18th (local time), the U.S. Federal Reserve (Fed) triggered the strong dollar by reducing the projection of next year's rate cuts from four times to twice in the dot plot containing the rate outlooks of the Fed Commissioners.
The Dollar Index, which reflects the dollar's value against the currencies of six major countries, is recorded at 108. This is the first time it has exceeded 108 since Nov. 2022, when the Fed was actively raising the base rate. Asian currencies are weakening one after another. The dollar-yen exchange rate is in the 157 yen range, and the dollar-yuan exchange rate is in the 7.30 yuan range.
Min Kyung-won, a research institute at Woori Bank, explained, “Recent profit-taking supply due to the rise in dollar value has reduced the dollar's strengthening range, but concerns about a strong dollar remain. The strong dollar has caused relative weakness in Asian currencies, triggering a decline in the won's value.”
Jae-Hyun Wi, an NH Futures economist, noted, “There was hope that the won's weakness would ease as martial law was lifted and the president's impeachment bill was passed, but political noise, such as additional impeachment issues against the acting president and the launch of a national policy council, continues to occur, making it difficult for the won-dollar exchange rate to stabilize below 1,450 won.”