Woori Bank "Concerns over Tariff War... Won-Dollar Exchange Rate Fluctuates in 1460 Won Range"

Woori Bank Report

Woori Bank predicted on the 7th that the won-dollar exchange rate would fluctuate around the 1460 won level. Concerns over the tariff war are growing, leading to foreign capital outflow from the domestic stock market, which is expected to increase the atmosphere of won depreciation. However, it is expected that the rollover negotiation (dollar selling) volume of export companies will limit the upper range.

Economists Min Kyung-won and Lim Hwan-yeol stated in a report, "Although domestic political uncertainty has been resolved, concerns over the tariff war are expected to intensify," adding, "The scale of foreign net selling in the domestic stock market is also increasing, creating an atmosphere of won depreciation."

They further predicted, "There is a high possibility that foreign banks, whose positions have been lightened due to last week's long stop (reduction in buying volume), will aggressively buy dollars. Bargain buying may also enter the market." On the 4th, the exchange rate ended the weekly trading in the mid-1430 won range. However, due to concerns over the US-China trade war, the exchange rate jumped 26.9 won in the night market, closing at 1461 won.

However, Woori Bank viewed the high-point selling by export companies as a factor supporting the upper range. They analyzed, "The supply and demand of export companies, which had been holding off on foreign exchange due to the impeachment-related events acting as a won Achilles' heel, may re-enter the market."

They continued, "Although the hurdle of uncertainty in the Trump trade war remains, the level from 1460 won is an attractive level to approach with high-point selling. While the pressure for exchange rate increase will be dominant due to foreign net selling in the stock market and domestic bargain buying inflow, it is expected to be mostly offset by the rollover negotiation of export companies, fluctuating in the early 1460 won range."

Jin Young-gi, Hankyung.com reporter young71@hankyung.com