"Strong dollar stands out on Middle East war fears… won/dollar expected to trade in the low 1,480s" — Woori

Woori Bank on the 4th presented an expected trading range for the won/dollar exchange rate of 1,477–1,490 won. This is because risk appetite has diminished, supporting the dollar.

Min Kyung-won, an economist at Woori Bank, said, "With a global risk-off mood and a stronger dollar, upward pressure is gaining the upper hand, and the won/dollar rate is expected to fluctuate around the low 1,480s."

In early morning trading, the won/dollar rate at one point surged to 1,506 won. It was the first time the exchange rate topped 1,500 won in about 17 years, since March 2009.

Min said, "As safe-haven demand strengthened on the possibility of a prolonged war with Iran, New York stocks closed weaker and the dollar posted gains," adding, "The won is likely to face depreciation pressure tracking the stronger dollar."

On the fallout from a potential closure of the Strait of Hormuz, he said, "Amid concerns over higher international oil prices and disruptions to energy supply and demand, the won’s depreciation is larger than that of major countries," and forecast that "as the dollar’s safe-haven status strengthens, offshore markets are likely to maintain long positioning, and with import payment demand also adding in, upward pressure on the exchange rate will dominate."

However, he cited exporters’ and heavy industry firms’ dollar-selling (nego) as well as onshore profit-taking at highs as factors that could cap the upside. Min said, "Even yesterday, the exchange rate jumped sharply, prompting exporters’ dollar-selling to hit the market," adding, "Today as well, such selling is expected to act as a factor curbing further gains in the exchange rate."

He also noted, "As the dollar in the New York market yesterday moved from early strength to late weakness, the exchange rate likewise pared gains after peaking at 1,506 won, which is also a reassuring factor," adding, "If the tone from the latter part of yesterday’s New York session continues, the likelihood of an extreme spike in the exchange rate will be limited."

Jin Young-gi, Hankyung.com reporter young71@hankyung.com