Get a Dollar for 1,135 Won

The dollar-won exchange rate has dropped to the 1,130 won level (the value of the won has increased) for the first time in four years.

The Korea Composite Stock Price Index (KOSPI) has dropped 20 points, breaking the 810 point barrier, due to influence from rising oil prices and misfortunes abroad.

On October 25 at the Seoul foreign currency market, the dollar-won exchange rate continued to drop for the fourth consecutive day, falling by 5.7 won from yesterday and closing the market at 1,135 won.

The dollar-won exchange rate has hit the 1,130 mark for the first time since November 17, 2000. (The rate was 1137.8 won at the time.)

The main reason behind the depreciation of the exchange rate is believed to be linked to the dollar-yen exchange rate.

During early October, the yen- dollar exchange rate at the Tokyo foreign currency market was 110 yen per dollar. Now you can buy a dollar with 106 yen.

Senior research official Jung Yung-shik of the Samsung Economic Research Institute said, “The August U.S. trade deficit was its second largest in history, reaching 54 billion dollars, and it is also expected that U.S. presidential candidates will allow the depreciation of the dollar.”

On the other hand, today’s composite stock index dropped by 20.03 points (2.41 percent), closing the market at 808.14 points. The KOSDAQ index dropped by 5.78 points (1.6 percent).

Record high international oil prices and a decline in the U.S. stock market are the major reasons behind this phenomenon.

Cheol-Yong Lee Chang-Won Kim lcy@donga.com changkim@donga.com