Won-Dollar Rate Opens at 1,555.2, Highest Since March 2009

The won-dollar exchange rate opened at its highest level in 17 years and three months on June 8.

The won opened at 1,555.2 per dollar in Seoul trading at 9 a.m., up 16.1 won from the previous daytime close of 1,539.1. It was the highest opening level since March 6, 2009, during the global financial crisis, when the exchange rate stood at 1,590 won per dollar. The won-dollar rate has been climbing sharply in recent sessions.

Moon Da-woon, an analyst at Korea Investment & Securities, said the won-dollar rate rose above 1,560 in overnight trading on June 5 after stronger-than-expected US employment data for May lifted the dollar index. He described the move as an overshoot driven by a combination of factors weighing on the won, expectations for further gains in the exchange rate and lopsided supply and demand.

The bigger issue, he said, is that the won-dollar rate could rise further. A prolonged war, additional tariff announcements still to come, May consumer price index data that could push the peak even higher, and a clearly hawkish Federal Open Market Committee meeting are among the events that could continue to pressure the won.

He added that the market may have no choice but to wait for those bearish factors to ease one by one. The clearest turning point for a reversal lower would be an end to the war, which he described as the starting point of many of the current problems, along with a weaker dollar. Until then, the upside is wide open, he said, adding that he hopes government efforts to defend the upper end and some dollar-selling flows will at least slow the pace of the move.

Lee Soo, Hankyung.com reporter 2su@hankyung.com