The won-dollar exchange rate plummeted more than 10 won in early trading, dropping to the low 1400s. As negotiations on the exchange rate between South Korea and the United States progress, volatility is increasing.
As of 10:12 a.m. on the 15th, the won-dollar exchange rate in the Seoul foreign exchange market was trading at 1,400.7 won. The exchange rate started that day down 9.3 won from the previous week's closing price (based on 3:30 p.m.), at 1,410.9 won, and fell more than 10 won from its opening price.
The exchange rate dropped to 1,390.8 won during overnight trading the night before, following reports that foreign exchange officials from South Korea and the U.S. had met face-to-face on the 5th in Milan, Italy, during the annual meeting of the Asian Development Bank (ADB).
However, after additional reports emerged that the U.S. would not include an exchange rate agenda in the current trade negotiations, the dollar strengthened, and the exchange rate rose above 1,410 won again. Nevertheless, it reversed direction again in the morning, dropping back down to the low 1400s.
According to Investing.com, the dollar index, which indicates the value of the dollar against six major currencies, was at 100.90 as of 10:07 a.m. that day. It had fallen to 100.266 in the afternoon before rising slightly again.
Woo Jae-hyun, an economist at NH Futures, noted, 'The recent market shows a prevailing outlook of moderate exchange rate declines due to a weak dollar, yet excessive shifts in supply and demand are observed simply because the exchange rate issue was mentioned in trade negotiations.' He added, 'This phenomenon is more pronounced in overnight markets or offshore exchange rates where the bid is thin and the reflection of domestic demand is insufficient.'
Min Kyung-won, a researcher at Woori Bank, said, 'Inflow of offshore long positions betting on a strong dollar is expected, and consistent inflows of demand for low-priced purchases driven by exporters' payment needs are also anticipated, indicating that additional upward pressure on the exchange rate is likely today.'