Ultimately, '1,000 Won' Was Broken... The Reason for the Sudden 'Yen Value' Drop

The Won-Yen Exchange Rate Has Dropped to the 950 Won Range This Month

The won-yen exchange rate, which exceeded 1,000 won per 100 yen until a month ago, has dropped to the 950 won range this month. Analysts suggest that the Korean won has shown relative strength due to expectations that Japan, facing increased uncertainty from trade disputes with the United States, will not be able to raise its benchmark interest rate. However, experts' opinions on the future movement of the won-yen exchange rate were divided.

According to Hana Bank on the 17th, the won-yen fiscal exchange rate (as of 3:30 PM) recorded 957 won 19 jeon per 100 yen on this day. Until the 29th of last month, the won-yen exchange rate, which was above 1,000 won per 100 yen at 1,009 won 52 jeon, has continued to decline after plummeting to 968 won 30 jeon on the 2nd of this month.

Seojunghoon, a senior researcher at Hana Bank, said, "Before the trade dispute with the United States, the market expected the Bank of Japan to raise the benchmark interest rate twice this year, but concerns spread that the Bank of Japan would not be able to raise the benchmark interest rate as expected after the announcement of mutual tariffs by the United States," adding, "As the recent won strength movement has gained momentum, the won-yen exchange rate is expected to fall further to the 940 won range in the short term."

Baek Seokhyun, a researcher at Shinhan Bank, explained, "Historically, there is a clear correlation between the rise of the U.S. stock market and the decline in yen value," adding, "As the U.S. stock market, which had been declining since President Trump's inauguration, recently rebounded sharply, the yen value also faced downward pressure, leading to a rise in the won-yen exchange rate." Baek also predicted, "Even under the assumption that there is not much room for further rise in the U.S. stock market, the won-yen exchange rate could further fall to the 930-940 won range in the short term."

On the other hand, some experts expected the yen value to turn relatively strong against the won. Inakwon, an FX derivatives specialist at Nonghyup Bank, said, "Recently, Japan's inflation indicators have decreased, reducing the incentive for the Bank of Japan to raise the benchmark interest rate, which has contributed to the decline in yen value," but added, "Considering that Japan's inflationary pressure is still higher than neighboring countries, and Japan's macroeconomic indicators such as growth rate and consumption are all better than Korea's, the won-yen exchange rate is expected to rise back to the 1,000 won level."

Park Sanghyun, a specialist at iM Securities, analyzed, "Although not immediately, the Bank of Japan will raise the benchmark interest rate once this year," adding, "Unlike Korea, where the benchmark interest rate is on a downward trend, Japan clearly has expectations for a benchmark interest rate increase, so the won-yen exchange rate will face upward pressure with 960 won as the standard."

Reporter Jeong Eui-jin