The won-dollar exchange rate reached its highest level in 16 years since the financial crisis of March 2009. Concerns about imminent mutual tariff increases from the second Trump administration and weak domestic stock prices due to the resumption of short-selling have heightened upward pressure on the won-dollar exchange rate.
According to the Seoul foreign exchange market on the 31st, the closing price of the won-dollar exchange rate for weekly transactions (as of 3:30 p.m.) recorded 1,472.9 won, an increase of 6.4 won from the previous transaction's closing price (1,466.5 won). This marks the highest point of the year and the highest level since the financial crisis on March 13, 2009 (1,483.5 won, based on closing price).
On that day, the exchange rate opened at 1,470.6 won, up 4.1 won from the previous transaction's closing price. The exchange rate continued to rise, reaching 1,472.10 won at 9:28 a.m. After fluctuating around 1,470 won, the exchange rate surged past 1,472 won just before the market closed at 3:28 p.m.
As market anxieties rise ahead of the imposition of mutual tariffs by the United States, risk-averse sentiment is strengthening. President Trump has indicated that he will announce 'mutual tariffs' responding to various tariffs and non-tariff barriers from countries on the 2nd of next month. Our country, which is experiencing a trade surplus with the United States, is also expected to be subject to this.
The pressure for the exchange rate to rise has also been heightened by domestic factors such as political instability stemming from the delay in the impeachment ruling of President Yoon Suk-yeol and the resumption of short-selling in the stock market. The Constitutional Court's impeachment trial ruling, initially expected in March, has now been postponed to April, exacerbating political instability. The resumption of short-selling after one and a half years has increased market volatility, stimulating risk-averse sentiment.
In the stock market, the exit of foreign investors has triggered a rise in the exchange rate. On this day, foreign investors sold a net 1.5794 trillion won worth of stocks in the securities market. As a result, the KOSPI index ended trading at 2,481.12, down 76.86 points (3.00%) from the previous trading day. This is the first time the KOSPI index has fallen below 2,500 points since the 10th of last month.
Min Kyung-won, a researcher at Woori Bank, noted that 'the domestic stock market will see increased declines due to the expansion of foreign net selling,' while adding that 'the prolonged political uncertainty in the country is preventing recovery in the sentiment toward the won, and the aggressive buying response from import companies fearing further increases in the exchange rate will also exacerbate the rise in the exchange rate.'