High-flying Exchange Rate at the Beginning of the Year, Expected to be in the 1300s in the Second Half... Anticipated Up-and-Down Trend

This year, the won-dollar exchange rate is expected to show an up-and-down trend. Concerns are emerging that the exchange rate, soaring due to the global strong dollar phenomenon combined with domestic political instability, could exceed 1500 won from the beginning of the year. In the second half, as political uncertainty is resolved, the exchange rate is expected to stabilize in the 1300s.

The main reason the exchange rate is expected to soar in the first half of the year is due to political uncertainty. Wi Jae-hyun, an economist at NH Futures, evaluated, "There were expectations that the won's weakness could be alleviated with the lifting of martial law and the passage of the presidential impeachment bill, but political controversies such as the impeachment of the acting authority continue," adding, "It is difficult for the exchange rate to calm down below 1450 won per dollar."

The inauguration of the Donald Trump administration in the United States is also cited as a factor of instability. How President-elect Donald Trump's campaign promises, such as universal tariffs, are actually implemented could greatly affect the Federal Reserve's interest rate policy and the value of the dollar.

Park Sang-hyun, a senior advisor at iM Securities, predicted, "Considering the policy uncertainties of Trump's second term, domestic political uncertainties, and the possibility of a base rate cut in January next year, the won-dollar exchange rate could rise to 1500 won early next year."

In the second half of the year, much of this uncertainty is expected to be resolved. Hana Securities forecasted that the won-dollar exchange rate would fall to △1430 won in the first quarter △1410 won in the second quarter △1380 won in the third quarter △1360 won in the fourth quarter. Jeon Kyu-yeon, a researcher at Hana Securities, predicted, "The dollar will decline at a gradual pace from the point where caution about employment increases."

Kang Jin-kyu, reporter josep@hankyung.com