Won-Dollar Exchange Rate at 1,450 for Second Day... "Difficult to Decline for Now"

The won-dollar exchange rate remains at the 1,450 level for the second day, a level seen during the global financial crisis. Although the upper limit of the exchange rate is not significantly breached due to the National Pension Service's vigilance on currency hedging, the strong dollar continues, showing no signs of calming.

On the 20th, the won-dollar exchange rate closed at 1,451.4 won in the Seoul Foreign Exchange Market, down 0.5 won from the previous session.

The exchange rate opened at 1,450 won that day. Although it fell to 1,447.70 won during the day due to the continued vigilance on currency hedging by the National Pension Service, it hovered in the early 1,450s as foreign net selling expanded in the domestic stock market and the strong dollar trend continued.

Previously, the Federal Reserve's hawkish interest rate cut outlook and the Bank of Japan's rate freeze fueled the strong dollar. The dollar index recorded 108.32 as of 1:40 a.m. local time.

On this day, the outflow of foreign funds in the domestic stock market further pushed up the exchange rate. Foreigners net sold 818.3 billion won in the KOSPI market and 87.5 billion won in the KOSDAQ market.

In response, the government decided to expand banks' forward exchange position (the value obtained by subtracting forward foreign currency liabilities from forward foreign currency assets) and ease the foreign currency loan requirements for export companies.

The previous day, the National Pension Service's Fund Management Committee decided to extend strategic currency hedging for up to 10% of overseas assets until next year.

However, the market believes that the government's market stabilization measures will contribute somewhat to easing volatility in the foreign exchange market, but there are no significant factors to subdue the exchange rate.

Lee Youkyung, a researcher at Hana Financial Research Institute, said, "Export companies seem to be watching a bit more," adding, "Supply and demand factors, such as more settlement demand, are more tilted towards exchange rate increases, and internal and external uncertainties may ultimately give more weight to the strong dollar."

Kim Yewon, yen88@wowtv.co.kr