The won-dollar exchange rate against the U.S. dollar closed at 1,545.2 won on the 29th. On a weekly closing basis, this is the highest level since March 9, 2009 (1,549 won), during the global financial crisis.
That day, the won-dollar exchange rate rose 13.2 won (0.86%) from the prior trading day (on the 26th). On the 26th, the rate climbed intraday to as high as 1,549.8 won but then plunged to 1,528.1 won at the close. Market participants said the foreign exchange authorities intervened. It then rebounded slightly and closed at 1,532 won, down 10.7 won from the prior trading day.
The day's gain was larger than the prior trading day's decline (0.69%). It was the third-highest daily increase in June. From the 15th of last month through that day, the won-dollar exchange rate has stayed above 1,500 won for 30 trading days in a row. It is the second-longest streak after the foreign exchange crisis (49 consecutive trading days).
The rise in the won-dollar exchange rate is attributed to the overall strength of the dollar. As inflation rose due to the Middle East war, not only Europe and Japan but also the United States is increasingly likely to raise its benchmark interest rate. The median of Federal Reserve Commissioners' year-end rate projections is 3.8%. That is higher than the current rate (3.75%), suggesting a hike within the year is possible. When the United States tightens liquidity, other currencies such as the won tend to weaken.
Net selling of domestic stocks by foreign investors also affected the exchange rate. When foreigners sell domestic stocks and convert the proceeds into dollars, dollar demand increases and the won-dollar rate rises. Foreigners posted net selling of 7.7557 trillion won on the Korea Exchange that day. On the prior trading day, they dumped 4.6269 trillion won.