The South Korean won faced significant pressure against the dollar during trading on April 16, breaching the 1400 won mark, a rare event that has occurred only three times before, during the 1997 currency crisis, the 2007–2008 financial crisis, and the U.S.-induced high-interest rate shock in 2022. The complex interplay of factors such as escalating tensions in the Middle East, potential sustained high interest rates in the United States, and the outward flow of dividends by foreign investors contributed to this development.
On that day, the dollar-won exchange rate opened at 1389.9 won, climbing 5.9 won from the previous day and briefly touching 1400.24 won in the morning, marking the first time in 17 months since Nov. 7, 2022 (1413.5 won). By afternoon, it had eased slightly, closing at 1394.50 won, reflecting an increase of 10.5 won from the previous day. In response to this rapid fluctuation, both the Ministry of Economy and Finance and the Bank of Korea (BOK) issued verbal statements, signaling their close monitoring of the situation and the foreign exchange market, marking the first verbal intervention since Sept. 15, 2022.
Financial markets speculate that the Korean won’s weakening trajectory may persist, driven partly by the global trend of a stronger dollar amid geopolitical tensions, notably the Israeli strike on Iran. The dollar index, a measure of the dollar’s value against major currencies, surged to a five-month high of 106 on the same day, with the dollar-yen exchange rate hitting a 34-year peak at over 154 yen. Additionally, anticipation of a delayed interest rate cut in the U.S. due to robust economic performance further buoyed the dollar.
April, being the time when foreign investors repatriate dividends from March shareholder meetings, tends to witness a stronger dollar. The Korea Securities Depository reports that a substantial amount, totaling 9 trillion won, including 1 trillion won from Samsung Electronics alone, will be disbursed as dividends to foreign investors this month.
