The South Korean won has experienced the most significant drop among major currencies worldwide this month, according to a recent report by Bloomberg. Comparing currency value changes against the U.S. dollar across 31 major countries, it was found that as of 3:55 p.m. on April 12, the won had fallen by 2.04% compared to March 29, marking the sharpest decline.
This drop surpasses that of other currencies such as the Russian ruble (-1.69%) and the Israeli shekel (-1.54%), as well as high-volatility currencies like the Brazilian real (-1.54%). The Japanese yen saw a decrease of 1.26% over the same period.
According to the Seoul Money Brokerage Services on April 12, the won-dollar exchange rate reached 1375.4 won, hitting its highest level in 17 months with an increase of 11.3 won from the previous day. This surge represents a 6.78% rise from the closing rate at the end of last year (1288.0 won) and a 2.09% increase from the closing rate at the end of last month (1347.2 won). Exceeding the 1375 won mark, the won-dollar exchange rate has not reached such heights since the currency crisis of 1997-1998, the global economic crisis of 2008-2009, and the rapid increase in U.S. benchmark interest rates in 2022.
The primary reason behind the won’s weakness is attributed to the strengthening of the dollar due to prolonged high-interest rates in the U.S.. Recent economic indicators such as the March non-farm payroll and the Consumer Price Index (CPI) have exceeded market expectations, leading to a consensus within the financial investment industry that the timing of U.S. interest rate cuts may be delayed beyond the initially anticipated June. The dollar index, representing the dollar’s value against six major currencies including the euro and yen, recorded 105.6 on April 12, reaching its highest level in five months since November last year.
With pressure mounting particularly on the Chinese yuan and Japanese yen, there are analyses suggesting that the won, exhibiting a similar trend, is experiencing a concurrent depreciation.
The rise in exchange rates can exert pressure on imported prices and increase dollar-denominated debt, posing burdens on related companies and national finances.
