Due to the mutual tariff imposition by the United States and the resumption of short selling in the domestic stock market, a strong dollar was observed, and the won-dollar exchange rate exceeded 1,470 won in the early trading on the 31st.

On that day, the won-dollar exchange rate in the Seoul foreign exchange market opened at 1,470.6 won, an increase of 4.1 won compared to the previous trading day's weekly transaction closing price (as of 3:30 p.m.). This is the first time the opening price has exceeded 1,470 won since Jan. 13 (1,473.2 won) two and a half months ago.

On the morning of the 31st, when short selling of all listed stocks is fully resumed, the KOSPI and the won-dollar exchange rate opening conditions are displayed on the electronic board in the dealing room of the Hana Bank headquarters in Jung-gu, Seoul. /Courtesy of News1

The exchange rate continued its upward trend, soaring to 1,472.10 won as of 9:28 a.m. This is the highest level since last month’s high of 1,472.50 won on the 3rd. However, as of 10:53 a.m., the exchange rate has somewhat decreased to 1,469.6 won.

As the market's vigilance rises ahead of the mutual tariff imposition by the United States on the 2nd of next month, a strong risk-averse sentiment is observed. The uncertainty in the political state due to the delayed impeachment verdict of President Yoon Suk-yeol is also contributing to the pressure for the exchange rate to rise as the investment sentiment in the won remains unrecovered.

The resumption of short selling, which had been banned for a year and a half in the domestic stock market, also influenced the situation. The resumption of short selling can heighten the volatility of the stock market and stimulate risk-averse sentiment. On this day, the KOSPI started at 2,506.47, down 51.51 points (2.01%) from the previous session, but shows a downward trend, recording 2,494.9 as of 11:06 a.m.

Min Kyung-won, a researcher at Woori Bank's Research Institute, noted, “Today, the domestic stock market will see an expansion of foreign net selling, exacerbating declines,” adding, “The prolonged domestic political uncertainty has hindered the recovery of investment sentiment in the won, and the aggressive purchasing responses from importers wary of further increases in the exchange rate will also fuel the rise in the exchange rate.”