The won-dollar exchange rate against the U.S. dollar opened at 1,547.3 won on the 26th. It rose 4.6 won from the previous trading day. Following the previous day (1,543 won), it started trading for the second straight day in the 1,540-won range. This is the highest level since Mar. 10, 2009 (1,554 won), when there was a global financial crisis.
The recent rise in the won-dollar exchange rate is attributed to overall dollar strength. When the United States raises its benchmark interest rate and tightens liquidity, most currency, including the won, tends to weaken. The market sees that the United States has no choice but to raise rates to contain inflation.
The United States' core personal consumption expenditures (PCE) price index last month rose 3.4% from a year earlier. It was the fastest increase since Oct. 2023. This adds weight to the Federal Reserve's stance that rate hikes are necessary.
Whether foreign investors are net sellers of domestic stocks is also expected to affect the exchange rate. When foreigners sell domestic stocks and convert the proceeds into dollars, the won-dollar exchange rate tends to rise. Foreign investors dumped 114.224 trillion won in stocks from January to May this year. That is 10 times the annual net selling in the previous year (11.0768 trillion won).