Won-dollar exchange rate jumps again, threatening the 1,470-won level

1,460 won breached 20 days after authorities’ intervention

The won-dollar exchange rate rose by more than 10 won on the 12th (a decline in the won’s value), climbing into the 1,460-won range. The move was attributed to a sharp weakening of the Japanese yen and foreign investors pulling out of the local stock market.

In the Seoul foreign exchange market, the won-dollar rate (as of 3:30 p.m.) ended onshore trading at 1,468.40 won, up 10.80 won from the previous session. It was the first time in about 20 days that the daytime close finished above 1,460 won, since Dec. 23 last month (1,483.60 won), just before the FX authorities’ year-end market intervention.

The exchange rate opened at 1,461.30 won and fell into the 1,457-won range early in the session. That was driven by a weaker dollar after reports that an investigation into Jerome Powell, chair of the U.S. Federal Reserve, had begun. However, as the dollar’s losses narrowed and pressure from a weaker yen intensified, the won-dollar rate turned higher.

The yen-dollar rate climbed intraday to 158.199 yen per dollar on reports that Japanese Prime Minister Sanae Takaichi would dissolve parliament and hold a snap election to pursue fiscal expansion. It marked the highest level in a year since Jan. 10 last year (158.877 yen).

Foreign investors added to upward pressure on the exchange rate by net selling 351.0 billion won worth of shares on the main board. The FX authorities view this year’s rise in the exchange rate as being linked to the dollar and other global currency moves. An official said, “It’s not a situation where only the won is weakening among global currencies, as it did last year.”

By Kang Jin-kyu josep@hankyung.com