Won-dollar exchange rate surpasses 1,540, highest since global financial crisis

The won-dollar exchange rate concluded its weekly trading session above 1,540 won, marking the highest point since the global financial crisis. This significant depreciation of the South Korean won is primarily driven by the strengthening U.S. dollar, fueled by expectations of further interest rate hikes by the U.S. Federal Reserve.

Compounding the pressure on the won, foreign investors have been consistently selling off South Korean stocks, leading to substantial outflows. In the past four trading days alone, foreign investors offloaded over 11 trillion won worth of securities on the KOSPI market. This sustained selling pressure further weakens demand for the Korean won and bolsters the dollar's position.

The current exchange rate reflects a prolonged period of weakness for the Korean currency. The won-dollar rate has not fallen below 1,500 won in 17 consecutive trading days. Furthermore, it has remained above the 1,500 won mark for 27 consecutive trading days, the longest stretch since the foreign exchange crisis of 1997-98, when it persisted for 49 trading days.

The weakening of the Japanese yen also plays a role in the rising won-dollar exchange rate. The yen has seen a significant decline against the dollar, reaching as high as 161.7 yen per dollar in Tokyo. Historically, the Korean won tends to move in tandem with the Japanese yen, meaning a weaker yen often correlates with a higher won-dollar exchange rate.