The won-dollar exchange rate has entered the 1,370 won range, falling to its lowest level in six months. It appears that the foreign exchange market reacted sensitively to news that South Korea and the United States are in currency negotiations.
On the 22nd, the won-dollar exchange rate in the Seoul foreign exchange market started at 1,377.0 won per dollar, down 10.2 won from the previous closing price at 3:30 p.m. the day before. Notably, overnight the exchange rate plummeted to 1,368.9 won, marking the lowest level since Nov. 4 of last year (1,368.6 won, low).
The reason for the decline that day was attributed to reports that the United States demanded a strengthening of the won from South Korea. In response, the Ministry of Economy and Finance stated in a briefing that "the two countries are sharing mutual understanding regarding the principles of foreign exchange market operation and exchange rate policy and discussing various agenda items."
Other currencies from Asian countries currently in negotiations with the United States are also showing strength. The dollar-yen exchange rate is maintaining around 143.4 yen, while the dollar-yuan exchange rate is holding at 7.2 yuan. The New Taiwan dollar has also demonstrated strength, falling below 30 New Taiwan dollars per U.S. dollar.
Min Kyung-won, a researcher at Woori Bank, noted that "as the dollar's status as a safe asset is shaken, the dollar showed weakness despite rising U.S. Treasury yields," adding, "The report that the United States will demand a strengthening of the won has also stimulated the sentiment for won strength."
Wi Jae-hyun, an economist at NH Futures, stated that "Asian currencies are currently reflecting upward pressure in their prices; however, it is likely that the U.S. stance is not toward pushing for appreciation but rather preventing artificial depreciation of Asian currencies." He added, "Nevertheless, the extent of rebound is likely to be limited due to the weak dollar environment stemming from distrust in U.S. finances."