On the afternoon of the 29th, when the exchange rate fluctuates around 1400, travelers walk in front of a dollar model hanging in a private currency exchange office in Myeongdong, Chung-gu, Seoul.

The won-dollar exchange rate crossed 1440 for the first time in 13 years and 6 months as the royal dollar (the superpower of the dollar) strengthened. Given the economic downturn hitting the financial market, there are concerns that an exchange rate exceeding 1,500 won is a “problem of the times.”

On the 30th of last month, the exchange rate of the won against the dollar was 1,430.2 won to the dollar in the Seoul foreign exchange market, down 8.7 won from the previous day’s closing price. The yuan and the euro bounced lower last night.

The exchange rate stabilized somewhat during the day, but is still hovering around 1440 points. This month alone, I changed the ointment store 11 times during the day. Considering it was around 1,100 won at the beginning of this year, it has jumped by 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 three times in a row by 0.75 percentage points, strengthening the dollar. When the US interest rate soared, money was converted to the dollar in search of profits, and the value of other countries’ currencies fell. The depreciation of the euro and yuan also had an impact due to disruptions in energy supplies and demand due to the war between Russia and Ukraine that began at the beginning of the year and China’s policy to contain the coronavirus 19.

It has already surpassed the market forecast, which originally predicted the highest exchange rate would be around 1420. According to a survey conducted by the Korea Industry Federation of 20 heads of research centers of 15 securities companies, experts predicted that the highest exchange rate in the future would be in average 1,422.7 won. Half of the respondents (53.3%) named the highest price between 1,400 and 1,420 won. 26.7% offered 1,450 won and 6.7% offered 1,480 won.

As the won-dollar exchange rate rises sharply, anxiety among stock investors is also growing. The appreciation of the won against the dollar is usually bad news for the stock market. This is due to the fact that foreign investors play an important role in the stock market. Foreign investors tend to withdraw their funds from the domestic stock market when the exchange rate rises. This is because if the value of the won against the dollar falls, there may be a foreign exchange loss in the process of exchanging shares after they are sold, which reduces the profit that can be made from trading shares in Korea.

As KOSPI broke through the 2134.77 mark during the day and made a new low, there is a forecast for further growth in the exchange rate. The stock market believes it can break through the 1400 line.

Amin Kwon, a researcher at NH Investment & Securities, said: “The current rate of appreciation of the won-dollar exchange rate is the second fastest since the global financial crisis.

Park Sang Hyun, 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 situation above 1400 will not last long. This is in terms of significant resistance already gone as it has already broken through the 1250 won support in the past 10 years. Hana Securities also predicted an exchange rate cap of 1,460 won.

Kim Sang Hoon, a researcher at KB Securities, said: “The dollar continues to strengthen as interest rates rise, economic growth slows in Europe and political risks increase in Italy and the UK.” the 1,450 won line, but given the long-term debt cancellation, the situation where it significantly exceeds the 1,400 won line will not last long.”

Hong Da Won, staff correspondent daone@edaily.co.kr