"President Yoon Suk-yeol's Impeachment Vote Fails... Korean Won Value Plummets" BoA's Warning

Bank of America Asia Interest Rates and Foreign Exchange Official Bloomberg Interview

As the political situation enters an impeachment phase, the foreign exchange market has experienced significant fluctuations. An American investment bank has predicted that the KRW/USD exchange rate could surge further due to the failure of the impeachment motion against President Yoon Suk-yeol.

According to Bloomberg on the 7th (local time), Bank of America (BoA) predicted that the value of the Korean Won could plummet on the 9th due to the failure of the impeachment motion against President Yoon the previous day. Adarsh Sinha, co-head of Asia interest rates and foreign exchange strategy at BoA, mentioned in an interview with Bloomberg that the KRW/USD exchange rate could surge in the Seoul foreign exchange market on the 9th.

He stated, "The uncertainty will persist for a longer period due to the failure of the impeachment," adding, "With the economy not doing well and the possibility of interest rate cuts increasing, the failure of the impeachment could lead to a significant drop in the Korean Won." He further explained, "Not only political instability but also economic fundamentals are exerting downward pressure on the Korean Won."

Previously, on the 6th, the KRW/USD exchange rate in the Seoul foreign exchange market (as of 3:30 PM) ended weekly trading at 1,419.20 KRW, up 4.10 KRW from the same time the previous day. Although the closing price did not rise significantly compared to the previous day, it soared to 1,429.20 KRW at one point during the day, showing extreme volatility.

The appearance of the 1,420 KRW range in weekly trading is the first time in 2 years and 1 month since November 4, 2022. Previously, after the declaration of martial law, the exchange rate rose to 1,442 KRW during overnight trading on the early morning of the 4th, but overnight trading is considered less representative due to low trading volume. This time, as the exchange rate soared to the 1,420 KRW range in weekly trading, it is interpreted that the foreign exchange authorities intervened in the market by selling a large amount of dollars.

Oh Jung-min Hankyung.com reporter blooming@hankyung.com