U.S. President Donald Trump has notified that a reciprocal tariff of 25% will be imposed on Korea starting August 1, causing a surge in the won-dollar exchange rate. Experts are predicting that if tariff uncertainties increase, the exchange rate could rise to the 1,380 won level.
According to the Seoul foreign exchange market on the 8th, the won-dollar exchange rate began at 1,373.1 won, up 5.3 won from the previous trading day's closing price of 1,367.8 won (as of 3:30 p.m.). This marks the first time the exchange rate has started in the 1,370 won range since the 23rd of last month (1,375 won).
The foreign exchange market fluctuated after Trump disclosed that he sent tariff SEOHAN ENGINEERING & CONSTRUCTION letters to Korea, Japan, and some other countries via his social media. The letters stated that a tariff of 25% will be imposed on all Korean products imported into the U.S. starting August 1, and higher tariffs will apply to goods transshipped to avoid tariffs.
However, it left room for the adjustment of reciprocal tariffs based on trade negotiations between Korea and the U.S. Treasury Secretary Scott Bessent also noted that the tariff rates specified in the letter are not a final notice but rather a diplomatic means reflecting the willingness to negotiate, suggesting that trade negotiations will take place next month.
As trade tensions escalate, the dollar is showing strength. According to Investing.com, the dollar index (DXY), which shows the value of the dollar against six major currencies, fell to around 96 before the disclosure of the tariff letter, but rose to 97.55 at 1 a.m. on the day the reciprocal tariff was announced.
Min Kyung-won, a researcher at Woori Bank, predicted that the won-dollar exchange rate could rise to 1,380 won. He stated, "The demands from the U.S. side during the upcoming negotiation process are likely to exert pressure for a weaker won rather than strengthening it," adding that "today's exchange rate is expected to rise, reflecting the dollar's strength due to escalating trade tensions and actual dollar demand in the region."
Wi Jae-hyun, an economist at NH Futures, said, "Today’s exchange rate is expected to rise to the high 1,370 won range as the risk-averse sentiment continues," adding that, "Since the dollar is showing movements as a safe asset, this risk-averse sentiment is likely to hinder foreign investors from entering the domestic stock market, exerting upward pressure on the exchange rate."