The won's real value based on purchasing power fell last month to the level seen during the global financial crisis, data confirmed on the 23rd.
According to the Bank of Korea on the day, Korea's real effective exchange rate index stood at 89.09 at the end of October, down 1.44 points from a month earlier. It was the lowest since 88.88 at the end of August 2009, during the financial crisis.
The real effective exchange rate is an indicator that shows the real purchasing power of each country's currency, factoring in prices and trade weights. It is calculated with the 2020 value set at 100. The higher the figure, the greater the purchasing power compared with other countries' currencies.
Korea's real effective exchange rate index exceeded 96 in early last year, then fell to 90.97 at the end of December, when martial law was in place. So far this year, it has fluctuated between the high 80s and the low 90s.
Last month, Korea's real effective exchange rate was the third lowest among 64 countries for which the Bank for International Settlements (BIS) publishes statistics, after Japan (70.41) and China (87.94). The decline in the index (-1.44 points) was the largest in seven months since March (-1.66 points). Among countries, it was the second largest after New Zealand (-1.54 points).
The decline in the won's value stems from the strength of the U.S. dollar, classified as a safe asset, and the expansion of overseas stock investments by domestic equity investors. Because these are factors difficult to resolve in the short term, some expect the exchange rate to continue rising for the time being.
Koo Yun-cheol, Deputy Prime Minister for Economic Affairs and Minister of the Ministry of Economy and Finance, also made a verbal intervention on the 14th, saying, "We are concerned about the current level of the exchange rate and will prepare stabilization measures." However, the exchange rate has continued to rise since.