Last December, the value of the South Korean won saw the largest drop rate, except for the Russian ruble, which is currently in conflict.
On the 12th, according to data submitted by Representative Lim Kwang-hyun of the Democratic Party to the National Assembly's Planning and Finance Committee, the won-U.S. dollar exchange rate (based on the closing price at 3:30 p.m.) rose from 1,394.7 won at the end of November last year to 1,472.5 won at the end of December.
In December last year, the won's depreciation rate against the U.S. dollar was calculated at -5.3%. This marks the second largest decline in value among the currencies of 20 major countries, following the Russian ruble at -6.4%.
The six currencies that make up the dollar index, including the European Union (EU) euro (-2.1%), Japanese yen (-4.7%), British pound (-1.7%), Canadian dollar (-2.6%), Swedish krona (-1.6%), and Swiss franc (-2.9%), all performed significantly better than the won.
The won-U.S. dollar exchange rate, which finished weekly transactions at 1,402.9 won on December 3, surged to 1,441.0 won during nighttime trading immediately after President Yoon Suk-yeol declared a state of emergency.
The exchange rate surged to 1,486.7 won during the day on December 27, when political turmoil increased over the appointment issue of Prime Minister Han Duck-soo as Constitutional Court Justice, and it closed the year at 1,472.5 won on the 30th.
Based on the closing price of weekly transactions at the end of the year, this was the highest level recorded since the end of 1997, when it was 1,695.0 won.
The Bank of Korea recently analyzed that the surge in exchange rates due to political instability is already having a direct and indirect impact on consumer prices.
In response to Representative Lim's inquiry about the impact of recent exchange rate volatility on prices, the Bank of Korea stated that considering model estimates, the rise in exchange rates since mid-November last year is estimated to have increased the consumer price index (CPI) growth rate by about 0.05-0.1 percentage points.
The Bank of Korea noted, 'The rise in exchange rates is expected to continue to exert upward pressure on prices, and the consumer price growth rate in January may increase slightly due to the recent high exchange rates.'
This is the first time the Bank of Korea has mentioned numerical impacts on prices due to the rise in exchange rates before and after the state of emergency.
However, the Bank of Korea stated, 'Considering low demand pressures and oil prices, the inflation rate is expected to remain stable below 2% for the time being.'