Korea-US 'Foreign Exchange Consultation' News... Won-Dollar Exchange Rate Falls Below 1400 Won

Korea Economic Daily

Summary

It was reported that the won-dollar exchange rate temporarily fell below 1400 won due to news of Korea-US foreign exchange consultations.
In the Seoul foreign exchange market, the won exchange rate closed at 1400 won, with a noticeable decline in night trading.
It was mentioned that face-to-face discussions between Korean and US authorities influenced the dollar selling trend, increasing market volatility.

Meeting of Authorities from Both Countries in Milan

US Side Seems to Demand Won Appreciation

Increased Volatility in Night Trading

Due to the impact of the Korea-US foreign exchange consultation, the won-dollar exchange rate fell sharply in night trading on the 14th, temporarily falling below the 1400 won level.

On this day, in the Seoul foreign exchange market, the won exchange rate against the US dollar recorded 1400 won as of 5:20 PM, down 16 won from the previous day's closing price in the weekly trading.

The won-dollar exchange rate, which ended the weekly trading at 1420 won 20 jeon, turned to a downward trend at around 4:52 PM. At 5:06 PM, it plummeted to 1396 won 50 jeon.

The dollar index, which represents the value of the dollar against the currencies of six major countries, fell from 100.869 at 3:30 PM to 100.422 at 5:08 PM. As of 11 PM, it recorded a level of 100.55.

A commercial bank official said, "It seems that the news of face-to-face discussions between Korean and US authorities regarding foreign exchange market operations led to dollar selling." This means that some market expectations of a demand for won appreciation by the US side were reflected in the supply and demand. During night trading, there is a tendency for exchange rate fluctuations to be large due to low liquidity.

Bloomberg News reported on the day, citing anonymous sources, that Choi Ji-young, Deputy Minister of Strategy and Finance, and Robert Kaproth, US Deputy Assistant Secretary of the Treasury, met in Milan, Italy, on the 5th to share mutual understanding on foreign exchange market operation principles and agreed to continue discussions in the future. While some speculate that the Korea-US exchange rate negotiations have reached an agreement stage, the dominant view is that expectations for an agreement are premature.

A foreign exchange authority official said, "Following the Korea-US '2+2 Trade Consultation' held in Washington, US, last April, working-level behind-the-scenes consultations have continued, and face-to-face contact was made on the occasion of the Asian Development Bank (ADB) Annual Meeting in Milan," drawing a line on the agreement speculation. Deputy Minister Choi attended the Korea-Japan-China and ASEAN+3 (Korea-Japan-China) Finance Ministers and Central Bank Governors Meeting and the 58th ADB Annual Meeting as the chief representative. A Ministry of Strategy and Finance official explained, "It is true that both sides met," and "working-level consultations are ongoing."

Reporter Huh Se-min semin@hankyung.com