Lee Chang-yong, governor of the Bank of Korea, said during a press briefing following the Monetary Policy Committee on the 17th, "The current won-dollar exchange rate is undervalued compared to economic fundamentals. If the U.S. government's tariff policy and domestic political uncertainties stabilize, I believe there is room for the exchange rate to fall further."
The governor pointed to political uncertainties as the background for the high exchange rate despite the weak dollar. He noted, "Political instability has had a significant impact, causing the exchange rate to rise from 1,400 won to 1,470 won shortly after the martial law was declared," adding, "After that, it has not fallen much, resulting in a significant increase in the exchange rate compared to the fluctuations in the dollar index."
He further stated, "Our country is connected through trade with China and has a higher dependence on exports compared to other countries, which means we are greatly affected by the U.S. government's tariff policy," adding, "It seems that the exchange rate has not fallen much because political and economic stability has not fully returned."
Meanwhile, the won-dollar exchange rate is experiencing increased volatility amid the declaration of martial law and mutual tariffs imposed by the U.S. The exchange rate, which exceeded 1,400 won shortly after the martial law was declared on Dec. 3 last year, soared to 1,487.60 won on the 9th when the U.S. imposed mutual tariffs. However, the following day, the U.S. government announced a 90-day grace period, causing it to plummet to 1,446.0 won. Subsequently, as the U.S.-China tariff war led to a weaker dollar, it dropped to the 1,410 won range.