Won-dollar exchange rate hits 15-year high of over 1,450 won

The won-dollar exchange rate exceeded 1,450 won for the first time in 15 years since the 2009 Great Financial Crisis. While the Korean won has remained unstable due to weak economic fundamentals and political uncertainty arising from the martial law fiasco, the Federal Reserve’s decision to slow down interest rate cuts has dealt another critical blow to the currency.

The Korean won depreciated against the U.S. dollar on Thursday, starting at a new high of 1,453 won per dollar as of this year, up 17.5 won from the previous day’s intraday closing price. Afterwards, the exchange rate fluctuated around 1,450 won during the day, closing at 1,451.9 won, up 16.4 won, as of 3:30 p.m. The closing price of intraday trading exceeded the 1,450-won threshold for the first time since March 13, 2009 (1,483.5).

The won-dollar exchange rate briefly surged to 1,440 early morning on Dec. 4, right after the declaration of martial law. However, it later stabilized to remain in the 1,430 range. Given this, this latest spike presumably has to do with the Fed’s decision released overnight. The Fed lowered rates by 0.25 percent points but projected only two more cuts - down from four - for the upcoming year. Fed Chair Jerome Powell commented on a new front in the Fed’s monetary policy, signaling that interest rates would go down slowly.


신아형기자 abro@donga.com