Won-Dollar Exchange Rate Surges Past 1520 Won, Hitting 17-Year High
On the 30th, the Won-Dollar exchange rate in the Seoul foreign exchange market exceeded 1,520 won for the first time in 17 years, reaching its highest level since the 2009 global financial crisis. The rate opened 4.5 won higher than the previous day at 1,513.4 won and extended its gains. After closing the regular trading session at 1,515.7 won at 3:30 PM, it continued to rise in overnight trading, soaring to 1,521.1 won by 4:43 PM. This marks the highest level in approximately 17 years, since the intra-day high of 1,561.0 won on March 10, 2009. The airport exchange rate, based on KB Kookmin Bank, rose to 1,583.9 won, clearly showing the won's weakness in the actual currency exchange market.
The background to the sharp rise in the exchange rate was geopolitical instability originating from the Middle East. Tensions escalated as the United States was reportedly preparing for a ground offensive and the Iran-aligned Houthi armed group in Yemen participated in the conflict. This led to a surge in international oil prices, with West Texas Intermediate (WTI) exceeding $100 per barrel and Brent crude surpassing $115.
The global strengthening of the dollar also fueled the decline in the won's value. The dollar index, which measures the dollar's value against a basket of six major currencies, rose for five consecutive days, breaking the 100 mark intra-day. The dollar index currently stands at 100.257. This reflects an increase in dollar demand amid heightened risk aversion sentiment.
Outflows of funds by foreign investors also added pressure to the rising exchange rate. On this day, foreign investors net sold 2.1335 trillion won worth of stocks in the KOSPI market. Institutions net purchased 883.1 billion won, and individuals net purchased 897.3 billion won. While institutions and individuals absorbed the selling pressure from foreign investors, the fund outflow acted as a factor that intensified the upward pressure on the exchange rate.
Atsushi Mimura, Vice Minister of Finance for International Affairs of Japan, stated, "If the current situation continues, we will take decisive measures before long." The easing of geopolitical risks in the Middle East is influencing the exchange rate's trend.