Exchange Rate Starts New Year with a Drop... Down 5.9 Won to 1466.6 Won [Hankyung Forex Market Watch]

On the first trading day of the new year, the won-dollar exchange rate fell to the 1460 won range. Analysts suggest that the Korean Bank's market stabilization message is helping the exchange rate find some stability.

On the 2nd, in the Seoul foreign exchange market, the won-dollar exchange rate (as of 3:30 PM) ended the weekly trading at 1466.6 won, down 5.9 won from the previous trading day. The exchange rate started at 1473 won, up 0.5 won, but began to decline around 10 AM. At one point during the day, it dropped to the 1465 won range.

The day's exchange rate drop was attributed to a slight easing of domestic political uncertainty. Korean Bank Governor Lee Chang-yong mentioned to reporters in the morning that he has high expectations for the exchange rate trend in the coming days and weeks. Governor Lee assessed that with Acting President and Deputy Prime Minister for Economic Affairs Choi Sang-mok appointing two constitutional judges, the risk of even the economic leadership being impeached has decreased, laying the groundwork for economic stabilization.

The Korean Bank's market stabilization message followed. Yoon Kyung-soo, Director of the International Department at the Korean Bank, stated, "We expect hedging volumes from the National Pension Service to be released soon," adding, "This will contribute to exchange rate stability."

Lee Soo-hyung, a member of the Korean Bank's Monetary Policy Committee, said in an interview with foreign media, "Considering domestic political turmoil and uncertainties surrounding the new U.S. administration, the market's reaction is understandable, but I believe the exchange rate will stabilize once uncertainties are resolved."

However, the Dollar Index, which represents the value of the dollar against six major currencies, is currently above 108, still at a high level.

Min Kyung-won, a researcher at Woori Bank, predicted, "The preference for risk assets has weakened, and the strong dollar trend is being maintained," adding, "Concerns that political turmoil will not be resolved in the short term may make it difficult for the exchange rate to fall."

At the same time, the won-yen exchange rate is 935 won per 100 yen. This is 2.48 won higher than the previous trading day's closing price of 932.52 won at 3:30 PM. The yen-dollar exchange rate is 156.7 yen per dollar.

Reporter Kang Jin-kyu josep@hankyung.com