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Tuesday, April 23, 2024

Won, dollar exchange rate falls to lowest point this year

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Electronic display boards at Hana Bank in central Seoul show Friday markets in Korea. [YONHAP]
Electronic display boards at Hana Bank in central Seoul show Friday markets in Korea. [YONHAP]

The Korean won fell 0.61 percent against the dollar on Friday to its lowest point this year.

The won reached 1,328.80 won per dollar Friday, beating the previous low of 1,326.10 won on July 15.  

The won declined after the U.S. Fed indicated it would continue raising rates until inflation slows substantially. The consumer price index in July reached 8.5 percent in the United States, lower than 9.1 percent in June but far surpassing the Fed’s policy-setting goal of an annual 2 percent.  

Federal Reserve Bank of St. Louis President James Bullard’s statement suggesting another major rate increase may have also affected the won-dollar value.  

“We should continue to move expeditiously to a level of the policy rate that will put significant downward pressure on inflation,” Bullard told the Wall Street Journal in an interview published Thursday.  

The won fell more than 10 percent from the beginning of this year amid the hawkish rise of base interest rates and the Russia-Ukraine war that caused investors to flee to safer assets.  

Talks about a currency swap between Korea and the United States were expected during visits by U.S. President Joe Biden in May and U.S. Treasury Secretary Janet Yellen last month as the won continues to fall this year and the Kospi also sharply declined 16 percent. 

While no such talks took place, authorities agreed to cooperate in stabilizing the foreign exchange market.  

Korea had a currency swap deal with the United States from March 2020 to the last day of 2021.  

BY JIN MIN-JI [jin.minji@joongang.co.kr]