U.S. President Donald Trump warned major countries about imposing tariffs, causing the won-dollar exchange rate to soar to the 1,470 won range on the 3rd. This is the highest since mid-last month when the exchange rate fluctuated due to the emergency martial law and impeachment crisis.
According to the Seoul foreign exchange market on the 3rd, the closing price for the day's transactions (as of 3:30 p.m.) recorded an increase of 14.5 won to 1,467.2 won compared to the previous trading day (1,452.7 won). The closing price is the highest since January 13 (1,470.8 won).
The exchange rate opened at 1,466.0 won, up 13.3 won from the previous day's closing price. Shortly after opening, the exchange rate surged, reaching as high as 1,472.3 won around 9:24 a.m. Based on intraday high prices, this is the highest since January 13 (1,474.3 won). However, in the afternoon, it fell below the 1,470 won mark, closing in the 1,460 won range.
On the 1st (local time), President Trump signed an executive order imposing additional tariffs of 25% on Canada and Mexico and 10% on China starting from the 4th, and indicated that he would impose a universal tariff on the European Union (EU) during trading hours, significantly impacting the strength of the dollar.
According to Investing.com, the dollar index, which shows the dollar value against six major countries, recorded 109.59 as of 4:46 p.m. During trading hours, it soared to 109.89, threatening to reach 110. Considering it recorded 107.81 based on high prices on the 27th of last month, it rose by about 2% in just a week.
Conversely, the value of major currencies, excluding the dollar, fell sharply. The euro-dollar exchange rate recorded $1.0232, marking the lowest level since November 2022, and the dollar-yuan exchange rate reached 7.36 yuan early in the trading session. The dollar-yen exchange rate continued to rise, reaching the 155 yen range.
In the domestic stock market, foreign selling surged, supporting the rise in the exchange rate. Foreigners sold a net amount of about 870 billion won in the KOSPI market and about 100 billion won in the KOSDAQ market. As a result, the KOSPI index closed at 2,453.95, down 63.42 points (2.52%) from the previous trading day.
Experts agreed that the exchange rate would fluctuate depending on the future dynamics of the trade war. Min Kyung-won, an economist at Woori Bank, noted that the won-dollar exchange rate rose by 60 won over a month when Trump's protectionist policy was initiated in June 2018, stating, "Given that the current situation is flowing similarly, there is a need to reset the upper limit of the won-dollar exchange rate short term," proposing the exchange rate peak at 1,480 to 1,500 won.
Wi Jae-hyun, an economist at NH Futures, said, "Trump's remarks that tariffs will be imposed not only on Mexico, Canada, and China but also on the EU serve as material to encourage the selling sentiment for the risky currency, the won," adding, "If the exchange rate fluctuates above 1,470 won, the compounding effect of export companies' negotiation volumes along with the authorities' intervention concerns will come into play."