The won-dollar exchange rate exceeded 1,470 won during trading, marking the highest level in 50 days. This is attributed to increased political instability following the delay in the impeachment ruling against President Yoon Suk-yeol. The mutual tariff imposition set for next month on the 2nd by the Trump administration has also exacerbated the depreciation of the won. Some expect that if this trend continues, the exchange rate could rise to the 1,480 won range.
According to the Seoul foreign exchange market on the 25th, the weekly closing price of the won-dollar exchange rate (as of 3:30 p.m.) recorded an increase of 1.5 won from the previous trading day, reaching 1,469.2 won. It is the first time in 50 days that the exchange rate has risen to the 1,470 won level since the 3rd of last month (1,472.5 won).
The exchange rate opened at 1,467.6 won, down 0.1 won from the previous trading day, before rising immediately. Around 10:42 a.m., it touched 1,470 won, and then continued to hover in the upper 1,460 won range, reaching 1,471.1 won by 11:26 a.m. It maintained a similar level afterward and closed in the 1,469 won range.
The exchange rate is rising due to domestic political instability. The previous day, the Constitutional Court held a trial date for the impeachment ruling against Prime Minister Han Duck-soo, who is also acting as interim prime minister, and rejected the National Assembly's impeachment motion. Of the eight judges, five expressed opinions to dismiss the case, one voted to accept it, and two expressed opinions to reject it. With diverging opinions among the constitutional judges, the uncertainty regarding the impeachment of President Yoon Suk-yeol has also increased, deepening political instability.
The impending mutual tariff imposition by the United States on the 2nd of next month is also fueling the depreciation of the won. Foreign media report that countries classified as 'Dirty 15' that are generating significant trade surpluses with the U.S. are likely to be targets. The Office of the United States Trade Representative (USTR) mentioned South Korea, Japan, China, Australia, Brazil, Canada, the European Union (EU), and Mexico as countries with trade imbalances in a federal register notice last month.
The weakening of the euro and yen, which had been strong for a while, has also contributed to the rise in the value of the dollar. As of 4:55 p.m. on this day, the dollar index (DXY), which reflects the dollar value against the major six countries, recorded 104.38. This is a slight increase compared to a week ago when it had dropped to the low 103 range. In contrast, the euro-dollar (dollars per euro) exchange rate is down 0.15% from the previous day at 1.07 dollars, while the dollar-yen (yen per dollar) exchange rate is up 0.01% at 150.68 yen.
Min Kyung-won, a researcher at Woori Bank, noted, "The strength of the dollar is a burden on the won, making it early to have confidence in the decline of the exchange rate," adding, "The real demand purchases from importers, driven by concerns over the rising exchange rate, will support the lower limit of the exchange rate." Woo Jae-hyun, an economist at NH Futures, diagnosed, "The expansion of domestic and international uncertainties is constraining the dollar supply for domestic corporations."
Experts predict that if domestic and external uncertainties are not resolved, the won-dollar exchange rate could rise to the 1,480 won range before and after the imposition of mutual tariffs by the United States. Park Soo-yeon, a researcher at MERITZ Securities, expressed this opinion, stating, "It seems difficult for the won to appreciate as domestic political uncertainties remain unresolved," and added, "It is also not easy to ease concerns over the mutual tariff imposition."