hankyoreh

A worker at a KEB Hana Bank in downtown Seoul organizes dollar bills on May 12. (Yonhap News)

Financial markets have been hit hard by the announcement of the US consumer price index (CPI). The won-dollar exchange rate broke the 1,280 range for the first time in over two years while the local stock market also tumbled.

The won-dollar exchange rate closed at 1,288.60 won on the Seoul foreign exchange market on Thursday. It rose 13.30 won from the previous day, breaking another high for the year. At one point during the trading, it even soared to 1,291.50 won.

As concerns about interest rate hikes by the US grew, the dollar strengthened and the won depreciated. Although the market expected exporters' selling volume and foreign exchange authorities' intervention to soften the blow to some extent, the fall in the won’s value still exceeded expectations. The current value of the won is even lower than the closing price of 1,285.70 won in March 2020, when markets were rattled by the onset of the COVID-19 pandemic.

Meanwhile, the KOSPI closed at 2,550.08, down 42.19 (1.63%). Kakao Pay and SK Square, which were both listed relatively recently, fell 6.02% and 3.58%, respectively, recording their lowest prices ever. The KOSDAQ index also closed at 833.66, down 32.68 (3.77%) from the previous day.

The release of the US CPI had a great impact on the fall in prices here in Korea. The US Department of Labor said on Wednesday (local time) that inflation was up 8.3% in April compared to the same period last year. It was lower than last March (8.5%) but slightly higher than the market estimate of 8.1%.

Given these recent developments, concerns are rising about to what extent the pace of austerity measures will continue to accelerate.

By Lee Jae-yeon, staff reporter

Please direct questions or comments to [english@hani.co.kr]