The won-dollar exchange rate against the U.S. dollar closed at 1,476.2 won on the 4th. It was up 10.1 won from the previous day.
The won-dollar exchange rate opened at 1,479 won that day. Because it broke through 1,500 won in overnight transactions (3:30 p.m. to 2 a.m. the next day), there were views that the rate could surge during the daytime transactions (9 a.m. to 3:30 p.m.) that followed. It is the first time in 17 years since March 2009, during the global financial crisis, that the won-dollar exchange rate has exceeded 1,500 won.
But such concerns did not materialize. It jumped to as high as 1,484.2 won at 10:34 a.m. and then narrowed its gains before the daytime transaction close. It eventually ended the session up 10 won from the previous day.
Since the U.S. and Israel struck Iran on the 28th of last month (local time), the won-dollar exchange rate has been rising continuously. After surging 26.4 won the previous day, it also closed higher that day. When geopolitical risks intensify, the market tends to favor safe-haven assets, and in such cases the value of the won, which is not a reserve currency, tends to fall.
In response, the Bank of Korea held a Middle East situation task force (TF) meeting. After the meeting, the Bank of Korea said, "Unlike in the past, dollar liquidity is ample, and Korea's external borrowing spread and credit default swap (CDS) premium are also remaining at stable levels."
Min Kyung-won, a researcher at Woori Bank, said, "There are concerns about adverse effects from higher international oil prices due to a closure of the Strait of Hormuz and disruptions in energy supply, and the won's weakness has widened compared with major countries," but added, "Exporters' negotiation (dollar selling) flows capped the top side of the exchange rate."