As the tariff war between the U.S. and China brings about a weakening of the dollar, the exchange rate between the won and the dollar fell to the late 1420s on the 14th.
On this day, the exchange rate between the won and the dollar opened at 1428.0 won, down 21.9 won from the previous trading day's closing price of 1449.9 won. This is the first time the exchange rate has started in the 1420s since Dec. 12 of last year when it was 1429.1 won.
The escalation of the U.S.-China trade war appears to have led to a weakening of the dollar, driving down the exchange rate. The China State Council announced that it will increase the tariff on U.S. imports from 84% to 125% starting on the 12th. As a result, investor sentiment, which had been focused on the dollar as a safe asset, is shifting to currencies such as the yen and Swiss franc.
According to Investing.com, as of 9:40 a.m. that day, the dollar index, which shows the value of the dollar against six major currencies, recorded 99.72. This is the first time the dollar index has fallen below 100 since April 2022. Meanwhile, the dollar-yen exchange rate is in the 143 yen range, and the dollar-franc rate has decreased to 0.8173 francs.
In the domestic stock market, the resurgence of foreign buying has lent support to the decline in the exchange rate. According to the Korea Exchange, on the 14th, the KOSPI index opened at 2454.28, up 21.56 points (0.89%) from the previous session. It continued to increase, recording 2463.61 as of 9:22 a.m.
Min Kyung-won, a researcher at Woori Bank, noted, "If exporters chase after the sharp drop in the exchange rate with selling pressure, there is a possibility of increased downside volatility," adding, "It is expected that the exchange rate will attempt to go below 1420 won amid the extended weakening of the dollar and the selling pressure."