Won-dollar exchange rate edges nearer to 1,355 on record trade deficit

Posted on : 2022-09-02 17:04 KST Modified on : 2022-09-02 17:04 KST
The exchange rate closed at just below 1,355 won to the dollar on Thursday
An employee at a bank in Seoul stacks $100 bills. (Yonhap)
An employee at a bank in Seoul stacks $100 bills. (Yonhap)

The won-to-dollar exchange rate shot up to right below 1,355 won on Thursday, while stock prices dropped by roughly 2% due to the weakening won and concerns about an economic recession.

On Thursday, the exchange rate closed at 1,354.9 won to the US dollar at the Seoul foreign exchange market, having increased by 17.3 won from the previous day. This was the highest the figure has been at closing since April 28, 2009, just over 13 years ago, when the exchange rate closed at 1,356.8 won.

The exchange rate continued to remain volatile after jumping by 19.1 won in a single day on Monday, even peaking at 1,355.1 won during trading on Thursday afternoon.

South Korea’s trade deficit amount for August, which was announced on the same day, was seen as what pushed the exchange rate upward. Foreign exchange authorities also pointed to the country’s continued trade deficit as one of the reasons the won has been weakening.

Consecutive trade deficits have destabilized the domestic supply of the US dollar, while the rise of the US dollar index — which measures the dollar’s value compared to six major currencies — has caused the exchange rate to jump by significant increments recently.

The dollar index weakened from the high 108 range until 6 am on Thursday but rebounded once the foreign exchange market opened at 9 am, exceeding 109.

The KOSPI closed at 2415.61, having fallen by 56.44 points, or 2.28%, from the previous day. The KOSDAQ index closed at 788.32, having fallen as well by 18.72 points (2.32%). The market explained this as an effect of the trade deficit, the weakening won, and concerns of an economic recession.

By Lee Jae-yeon, staff reporter

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

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