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The won-dollar exchange rate soared to 1,265 won, a new high in two years and one month.
The KOSPI also fell more than 1% due to the plunge in the US stock market, sinking to 2,630.
The won-dollar exchange rate is the highest in more than two years… 30 won surge in the last 5 trading days
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At the Seoul Foreign Exchange Market on the 27th, the won-dollar exchange rate finished trading at 1265.2 won, up 14.4 won from the previous day.
The won-dollar exchange rate, which started at 1262.1 won, up 11.3 won from the previous day’s closing price, fluctuated and increased in the afternoon.
It is the first time in two years and one month since March 24, 2020, right after the spread of COVID-19, that the won-dollar exchange rate exceeded 1,260 won based on the closing price. In particular, in the last five trading days alone, the increase was close to 30 won.
On the 25th, the foreign exchange authorities intervened verbally, saying, “We are closely monitoring the recent exchange rate movements as well as the trends of major supply and demand entities.”
The problem is that it is not easy to predict when the won-dollar exchange rate will stop rising. This is because the 1,250 won level, the psychological defense line, was broken the day before, and it was given up to 1260 won.
As the US central bank, the Federal Reserve (Fed), is sending a so-called ‘big step’ signal to the market every day to raise the key interest rate by 0.5 percentage points at a time, the dollar’s strength is not slowing down.
In addition, a surge in international energy prices due to the prolonged crisis in Ukraine and a decrease in growth rate due to the prolonged lockdown of major Chinese cities triggered by the COVID-19 are acting in a complex way.
It is also burdensome that a rise in the won-dollar exchange rate can lead to a vicious cycle leading to domestic inflation, which is already a burden.
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In fact, as international oil prices soared due to the onset of the Ukraine war, the domestic import price index jumped more than 7% last month.
In terms of the rate of increase, it was the largest in 13 years and 10 months since May 2008 (10.7%) during the subprime mortgage financial crisis.
The rise in the won-dollar exchange rate has acted as a positive factor for exports in the past, but in recent years, it is difficult to secure price competitiveness as the exchange rate against the dollar in China and Japan, which are export competitors, has risen sharply.
The accompanying rise in the price of imported raw materials, which are settled in dollars, leads to an increase in domestic prices and can act as a negative factor affecting overall export competitiveness except for some industries.
Joo Won, head of the economic research department at Hyundai Research Institute, said in a phone call with CBS, “The won-dollar exchange rate is rising significantly due to the recent weakness in the won. In fact, our exports do not compete with American products, but with Chinese, Japanese, and German products.” , the euro is also weakening against the dollar, so it is not working to our advantage. It will not help greatly in price competitiveness of our exports.”
“Rather, if the exchange rate rises, import prices rise. The recent rise in the exchange rate is expected to increase our import prices, especially domestic inflationary pressure,” he said.
In the aftermath of a sharp decline in the US stock market, the KOSPI was pushed to the 2,630 level.
yunhap newsThe KOSPI was also unable to avoid the aftermath of a sharp decline in the US stock market, triggered by high-intensity austerity measures from the US and concerns about an economic slowdown.
On the 26th (local time), the New York Stock Exchange plunged 3.95%, with the Nasdaq Composite falling 3.95% on fears of intensive tightening by the US Federal Reserve and an economic slowdown.
On this day, the KOSPI index closed at 2639.06, down 29.25 points (1.10%) from the previous trading day.
The KOSPI started at 2630.58, 37.73 points (1.41%) lower than the battlefield, and fell to 2615.50 at the beginning of the market.
In the stock market, foreigners and institutions sold 678.7 billion won and 240 billion won, respectively, leading the share price decline.
Individuals net bought 906.9 billion won to defend the index, but it was not enough.
In the top 10 by market cap, most stocks fell except for Samsung Biologics (0.75%) and Samsung SDI (1.55%).
Samsung Electronics fell 1.66% to a new 52-week low.
LG Energy Solutions (-1.30%), SK Hynix (-2.25%), Naver (-2.26%), Kakao (-2.00%), Kia (-0.24%), and LG Chem (-2.53%) also suffered a downtrend. .
The KOSDAQ index also closed at 896.18, down 14.98 points (1.64%) from the previous day, giving up the 900 level again within one day.
In the KOSDAQ market, institutions net sold 182.1 billion won, foreigners 12.2 billion won, and individuals net bought 194.6 billion won.
