Average Exchange Rate in Q1 Reaches 1452 Won, Highest Since Financial Crisis

Weak Dollar Transition Yet Won Remains Weak

The average won-dollar exchange rate in the first quarter of this year rose to its highest level since the financial crisis (the value of the won has fallen). Factors such as domestic political uncertainty and concerns over U.S. tariff imposition have complexly influenced the won's weakness.

According to the Bank of Korea on the 1st, the average exchange rate from January to March this year (based on weekly closing prices) is 1452 won 91 jeon per dollar. This is the highest level since the first quarter of 1998 during the International Monetary Fund (IMF) financial crisis when it was 1596 won 88 jeon.

Amid continued political turmoil following President Yoon Suk-yeol's declaration of martial law at the end of last year, the escalating tariff war after the inauguration of the Donald Trump administration has fueled the won's weakness. Since mid-last month, the dollar has turned weak due to growing concerns about a U.S. economic recession, but the won remains weak due to strengthened risk aversion sentiment.

Experts predict that the exchange rate will remain high for the time being after the second quarter. There are also concerns that it could touch 1500 won in the short term. If the exchange rate remains in the 1400 won range this year, there is a possibility of surpassing the highest annual rate recorded in 1998 (1394 won 97 jeon).

On this day, the won-dollar exchange rate in the Seoul foreign exchange market slightly fell after the announcement of President Yoon's impeachment ruling, closing the weekly trading at 1471 won 90 jeon, 1 won lower than the previous day.

Reporter Kang Jin-kyu josep@hankyung.com