The won-dollar exchange rate approached 1470 won during trading, marking its highest level in almost a month. The primary reasons are analyzed as the prospective imposition of mutual tariffs by the United States and instability in the domestic political situation. Experts project that the upward trend in the exchange rate will continue due to ongoing domestic and international uncertainties.
According to the foreign exchange market in Seoul on the 21st, the weekly transaction closing price for the won-dollar exchange rate (as of 3:30 p.m.) was recorded at 1462.7 won, which is an increase of 3.8 won compared to the previous trading day's closing price of 1458.9 won. This is the highest closing price since the 3rd of last month (1467.2 won).
The exchange rate started at 1466.5 won, up 7.6 won from the previous trading day's closing price, and continued to rise, soaring to 1469.5 won around 10 a.m. This is also the highest level since the 3rd of last month (1472.5 won). Afterward, the exchange rate fluctuated around 1469 won before declining to the 1450 won range in the afternoon.
As the timing of the U.S. mutual tariff imposition approaches, the dollar has shown strength. U.S. Treasury Secretary Scott Valsent noted that he would announce the mutual tariff rates by country on the 2nd of next month. Consequently, concerns about stagflation (inflation occurring amid economic recession) have been raised in Europe, and fears of export slowdown are expanding in Korea, increasing global market instability.
According to Investing.com, the dollar index (DXY), which shows the dollar's value against the currencies of six major countries, was recorded at 104.02 as of 3:39 p.m. It has slightly risen from the early 103 range observed on the 18th. In contrast, the euro-dollar exchange rate dropped from $1.09 to $1.08 during the same period.
The delay in the impeachment ruling against President Yoon Suk-yeol has also contributed to increased political uncertainty. Initially, a ruling was expected on the 21st, but the Constitutional Court has yet to set a ruling schedule. In response, the opposition has introduced an impeachment motion against Acting Minister of Economy and Finance Choi Sang-mok, who refused to appoint Constitutional Court Justice candidate Ma Eun-hyeok, exacerbating political instability.
However, foreign buying of domestic stocks has limited the extent of the exchange rate's increase. On this day, foreigners net bought 846 billion won in the securities market, supporting the stock market. As a result, the KOSPI index finished at 2643.13, up 6.03 points (0.23%) from the previous trading day.
Experts forecast that the upward trend in the exchange rate will continue for the time being. Kim Chan-hee, a research institute analyst at Shinhan Investment Corp., said, “Until the impeachment ruling, domestic political uncertainties will make it difficult for the exchange rate to decline,” adding, “The delay in the establishment of a supplementary budget to stimulate the economy has also weakened the expectations of recovery for the won's value.”
Min Kyung-won, a research institute analyst at Woori Bank, assessed that “today’s exchange rate has risen reflecting the renewed trade dispute risks due to the impending mutual tariff increase in early April in the U.S.,” and added, “Impeachment-related uncertainties also act as a vulnerability for the won.” NH Futures economist Wi Jae-hyun also noted, “The prolonged impeachment sentiment is acting as a factor of exchange rate instability.”