Korean Won Hits Six-Month Low Against US Dollar Amid Trade Negotiation Uncertainty
The exchange rate of the Korean won against the US dollar has surpassed 1,440 won during intraday trading, reaching its highest level in six months. This movement is attributed to uncertainties surrounding Korea-U.S. trade negotiations and net selling by foreign investors, which contribute to the weakening of the won.
According to the Seoul foreign exchange market on the 23rd, as of 2:47 PM, the won-dollar exchange rate was trading at 1,439.8 won, marking an increase of 0.49% from the previous session. At one point during the day, the rate surged to 1,441.5 won, the highest level since April 29, when it also reached 1,441.5 won.
Reports suggest that the discussions between Korea and the U.S. regarding a resolution to tariff negotiations include a proposal for South Korea to invest $200 billion (approximately 286 trillion won) in the U.S. over eight years, at an annual rate of $25 billion. This proposal is believed to be a factor leading to the depreciation of the won, especially as Bank of Korea Governor Lee Chang-yong indicated that the amount that could be raised in one year without shocking the foreign exchange market would be between $15 billion and $20 billion. The recently discussed amount of $25 billion exceeds this range.
Analysts have also cited structural factors as contributing to the ongoing rise of the won-dollar exchange rate. During a press conference following a monetary policy meeting, Governor Lee explained that the impact of dollar strength on the recent rise in the won-dollar exchange rate accounted for only one-fourth of the change. The remaining factors include fluctuations in the Chinese yuan due to the U.S.-China conflict, concerns over the new Japanese Prime Ministers expansionary fiscal policies, and issues related to tariff negotiations and the challenge of raising $350 billion.
Governor Lee further stated that if the tariff negotiations proceed positively, it could lead to a decrease in the won-dollar exchange rate.
According to the Seoul foreign exchange market on the 23rd, as of 2:47 PM, the won-dollar exchange rate was trading at 1,439.8 won, marking an increase of 0.49% from the previous session. At one point during the day, the rate surged to 1,441.5 won, the highest level since April 29, when it also reached 1,441.5 won.
Reports suggest that the discussions between Korea and the U.S. regarding a resolution to tariff negotiations include a proposal for South Korea to invest $200 billion (approximately 286 trillion won) in the U.S. over eight years, at an annual rate of $25 billion. This proposal is believed to be a factor leading to the depreciation of the won, especially as Bank of Korea Governor Lee Chang-yong indicated that the amount that could be raised in one year without shocking the foreign exchange market would be between $15 billion and $20 billion. The recently discussed amount of $25 billion exceeds this range.
Analysts have also cited structural factors as contributing to the ongoing rise of the won-dollar exchange rate. During a press conference following a monetary policy meeting, Governor Lee explained that the impact of dollar strength on the recent rise in the won-dollar exchange rate accounted for only one-fourth of the change. The remaining factors include fluctuations in the Chinese yuan due to the U.S.-China conflict, concerns over the new Japanese Prime Ministers expansionary fiscal policies, and issues related to tariff negotiations and the challenge of raising $350 billion.
Governor Lee further stated that if the tariff negotiations proceed positively, it could lead to a decrease in the won-dollar exchange rate.
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