FX rate jumps again on Middle East risks… “Could reach 1,550 won this month”

On the 5th, Korea Investment & Securities presented this month’s expected trading range for the won-dollar exchange rate at 1,450–1,550 won.

The won-dollar rate recently spiked into the 1,500-won range at one point as geopolitics-driven risks from the Middle East intensified—a crisis-level figure seen only during major financial shocks such as the Asian financial crisis (1997–1998) and the global financial crisis (2008–2009).

In a report released that day, Moon Daun, an analyst at Korea Investment & Securities, said the firm raised the top end of the range to 1,550 won on expectations that West Texas Intermediate (WTI) crude could climb to $90–$100.

Moon noted that it took seven days for oil prices to rise from immediately after the outbreak of the Russia–Ukraine war in February 2022 to the peak at the time, with a gain of 34.2%, adding that even a simple extrapolation of that trajectory from WTI’s July 3 closing price of $74.6 per barrel would imply a rise to around $90.

He also said that if the exchange rate breaks above 1,500 won, it would be difficult to find a clear resistance level. While authorities may be expected to try to defend the upper end in 10-won increments as the level becomes increasingly burdensome, he said it would be hard to expect meaningful resistance when high oil prices and a strong dollar coincide.

Moon added that the average won-dollar rate in the first quarter would likely come in around 1,460 won—about 30 won higher than the previous forecast of 1,430 won—and said the full-year average forecast was raised to 1,445 won from 1,420 won.

By Ryu Eun-hyeok ehryu@hankyung.com