Won-dollar exchange rate breaks above 1,510 intraday…highest since the financial crisis

The won-dollar exchange rate climbed above 1,510 intraday for the first time in about 17 years, driven by fallout from the Middle East war.

In Seoul’s FX market on the morning of the 23rd, the won opened at 1,504.9 per dollar and extended gains, surging to as high as 1,511.8 in early trade. That is the highest level since March 10, 2009, when it hit 1,561.0 intraday during the global financial crisis. The rate had stayed in the 1,500s—1,501.0 on the 19th and 1,500.6 on the 20th—before rising further on the day.

The move reflects a jump in global oil prices and stronger demand for the safe-haven dollar after Iran blocked the Strait of Hormuz, a key route for crude shipments. Foreign investors are net sellers of more than 1.16 trillion won worth of Kospi shares.

Tensions in the Middle East are escalating. President Trump warned on the 21st (local time) that “if Iran does not fully open the Strait of Hormuz within 48 hours, we will attack and completely eliminate Iran’s various power plants,” and an Iranian military spokesperson countered that “if the threat is carried out, the strait will be completely closed.” Reports also said the U.S. military has begun internal preparations for a potential deployment of ground forces.

The government is drawing up a supplementary budget plan to cushion household and industrial fallout from the Middle East war. The Democratic Party and the government and the Blue House agreed to set the size of the supplementary budget at “around 25 trillion won.”

Hong Min-seong, Hankyung.com reporter mshong@hankyung.com