Won-Dollar Exchange Rate Plunges Amid Dollar-Selling and Yen Weakness

The South Korean won-dollar exchange rate fell for the first time in eight trading sessions on September 21. The price dropped by 2.3 won to 1,381.0 won per US dollar.

The strengthening of the Japanese yen and dollar-selling movements by exporters ahead of the Chuseok holiday contributed to the decline in the exchange rate. This is despite the upward pressures from the U.S. monetary tightening stance and Middle East risks.

According to data, the intraday high on September 21 was 1,388.3 won per US dollar, which is the highest level since August 26. The U.S. dollar remained strong due to the ongoing rate hikes by the Federal Reserve and risk-aversion sentiment driven by geopolitical tensions in the Middle East.

Cautiousness over the weak yen also played a role in the declining exchange rate. Japanese foreign exchange authorities conducted a rate check as the yen's value continued to decline even after the Bank of Japan raised its benchmark interest rate on September 18.