KRW-JPY Exchange Rate Approaches 980 Won...Highest in 21 Months [Hankyung FX Market Watch]

As expectations for interest rate hikes in Japan spread, the won-yen exchange rate approached 980 won per 100 yen. It has risen to its highest level in about 21 months since May 2023. The won-dollar exchange rate remained in the 1,460 won range due to tariff pressure from the United States.

On the 4th, the won-dollar exchange rate (as of 3:30 PM) in the Seoul foreign exchange market closed weekly trading at 1,461.80 won, down 1.60 won from the previous trading day. The exchange rate, which had jumped due to the strong dollar phenomenon last week, fell slightly on this day, reflecting the dollar weakness during the holiday period. It fell to as low as 1,455.50 won during the morning but gave up the decline in the afternoon.

The market had forecast that the won-dollar exchange rate would fall further due to dollar weakness factors such as the slowdown in the US February manufacturing index, but it appears that pressure from US President Donald Trump's tariffs supported the lower end. The dollar index, which represents the value of the dollar against six major currencies, fell 0.67% from the previous day to 106.526.

As of 3:30 PM, the won-yen cross rate was 978.61 won per 100 yen. This is up 3.17 won from the previous trading day's reference rate of 975.44 won at the same time. This is the highest in 21 months since May 16, 2023 (984.37 won).

Since there is no direct trading market for the yen, the cross rate is determined based on the value of each currency against the dollar. The yen-dollar exchange rate recorded 149.36 yen, down 0.67% (yen value up) from the previous day.

The yen's strength is interpreted as reflecting expectations for additional interest rate hikes by the Bank of Japan. The yen's strength intensified further when Japanese Finance Minister Katsunubu Kato said in the morning, "Japan is not using a weak currency policy."

Reporter Jinkyu Kang josep@hankyung.com