Won Slumps Near 1,400 Amid Fed Tightening Fears
The South Korean won has weakened significantly in recent days, trading at around 1,385 per dollar. This marks a loss of nearly 50 won to the dollar over less than two weeks and brings the currency close to the 1,400 level.
Analysts attribute this decline to renewed US tightening concerns and foreign stock selling. The Federal Reserve's recent rate hike and signal for further hikes have lifted Treasury yields and strengthened the dollar.
Woori Bank FX economist Min Kyung-won noted that the exchange rate will face upward pressure from dollar strength following the Fed's rate hike and risk-off sentiment.
Moon Jung-hee, an FX researcher at KB Kookmin Bank, suggested that the earlier won rally reflected a softer dollar coinciding with large current account and trade surpluses, reduced foreign stock selling, and relatively contained overseas investment outflows by Korean investors.