Exchange rate soars amid energy supply and demand disruptions and global inflation
The psychological help line has already been crossed… The possibility of the highest 1490 the exchange rate ↑
On the afternoon of the 29th, when the exchange rate is in the high range of 1400, travelers pass in front of a dollar model hanging at a private money changer in Myeong-dong, Jung-gu, Seoul. [연합뉴스]
The win-dollar exchange rate has crossed the 1440 line for the first time in 13 years and 6 months as the King’s Dollar (the dollar’s super strength) intensifies. Given the economic recession that has hit the financial market, there are concerns that the exchange rate in excess of the 1,500 won is a ‘time problem’.
On the 30th of last month, in the Seoul foreign exchange market, the exchange rate of won against the dollar ended at 1430.2 won per dollar, down 8.7 won from the previous day’s closing price. Last night, the yuan and the euro fell as the rebounded.
The exchange rate has stabilized somewhat on the day, but is still hovering around the 1440 range. In this month alone, I have changed the lotion store 11 times during the day. Considering it was about 1,100 won at the beginning of this year, it jumped about 30% in just 9 months.
Global inflation is behind the rise in the won-dollar exchange rate. In response to rising inflation, the US Federal Reserve raised interest rates by 0.75 percentage points three times in a row, boosting the dollar. As the US interest rate increased, money seeking profits were shifted to the dollar, and other countries’ currencies fell in value. The devaluation of the euro and the yuan also had an impact due to disruptions in energy supply and demand due to the Russia-Ukraine war that started at the beginning of the year and China’s Corona 19 containment policy.
It has already exceeded market forecasts, which initially predicted a top exchange rate of around 1420. According to the results of a survey conducted by the Federation of Korean Industries on the 20th of the heads of research centers in 15 securities companies, experts predicted that the highest exchange rate in the future would be an average of 1422.7 won. Half of the respondents (53.3%) predicted that 1,400 to 1,420 would win as the highest price. 26.7% offered 1,450 won and 6.7% offered 1,480 won.
As the dollar-earning exchange rate increases, concern among stock investors also grows. An increase in the dollar-earning exchange rate usually acts as bad news for the stock market. This is because foreign investors play an important role in the stock market. Foreign investors tend to withdraw their money from the domestic stock market when the exchange rate rises. This is because, if the value of the gain against the dollar falls, foreign exchange losses may occur in the process of exchanging stocks after selling them, reducing the profit that can be obtained from stock trading in Korea.
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The year end exchange rate is likely to be around 1500 vs. it won’t last long
As the KOSPI broke to 2134.77 during the day and renewed a new low, the exchange rate is forecast to rise further. The stock market believes it can break through the 1400 line.
Amin Kwon, researcher at NH Investment & Securities, said, “The current rate of increase in the won exchange rate is the second fastest since the global financial crisis.
Park Sang-hyeon, a researcher at Hi Investment & Securities, said, “A new level of exchange rate war has begun.”
On the other hand, there is a forecast that the position above the 1400 line will not last long. From the perspective that meaningful resistance has already disappeared as it has already broken through the support level of 1,250 gained over the last 10 years. Hana Securities also predicted that the top end of the exchange rate at 1,460 would have been won.
Kim Sang-hoon, a researcher at KB Securities, said, “The dollar continues to strengthen as interest rates rise, the European economic slowdown, and political risks in Italy and the UK increase.” “There is a possibility that it will surpass the level won at 1,450, but given the long-term debt relief, the situation where it is much above the 1,400 line will not last long.”
By Hong Da-won, staff reporter daone@edaily.co.kr
