Won-dollar exchange rate remains above 1400 despite gov’t intervention

Despite the South Korean government’s belated verbal intervention against the won-dollar exchange rate that has been soaring since the U.S. presidential election, the exchange rate failed to fall below 1,400 won per dollar. The exchange rate has been stuck at above 1,400 won per dollar due to the dollar’s continued strength and an exodus of foreign investors. The stock market also failed to make a meaningful rebound, trading flat.

Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok held an emergency macroeconomic meeting on Thursday morning and asked for active market stabilization measures to be implemented in a timely manner if financial and foreign exchange market volatility escalates excessively. The government made a verbal intervention as the exchange rate continued to surge. This is the first time in seven months that the government has verbally intervened in the foreign exchange market since April when the exchange rate soared amid unrest in the Middle East.

However, the won-dollar exchange rate closed at 1,405.1 won per dollar as of 3:30 p.m. on Thursday, down only 1.5 won from the previous day. Despite the government’s intervention, the exchange rate has exceeded the psychological threshold of 1,400 won per dollar for three consecutive days, prompting criticism that the government has lost control of the domestic foreign exchange market.

The market attributed the stronger dollar to realizing a “red sweep” in the U.S., where the Republican Party controls both the Senate and the House of Representatives. On Thursday, the dollar index, which shows the dollar’s value against a basket of six major currencies, soared to a high of 106.78, the highest level in a year since November last year.


이동훈 dhlee@donga.com