Exchange Rate Fluctuates Amid Tariff Uncertainty... KRW-USD Rate Drops by 18.6 Won [Hankyung Foreign Exchange Market Watch]

The uncertainty in the U.S. tariff policy is causing significant fluctuations in the KRW-USD exchange rate. The rate, which surged as the imposition of tariffs seemed imminent, plummeted again as a wait-and-see stance emerged.

On the 5th, in the Seoul foreign exchange market, the KRW-USD exchange rate (as of 3:30 PM) ended the weekly trading at 1,444.30 won, down 18.60 won from the previous day. The rate started the day at 1,453.50 won, down 9.40 won, and expanded its decline.

Recently, the exchange rate has been fluctuating due to concerns over a global tariff war. The rate, which surged by 35.90 won over two trading days on the 31st of last month and the 3rd, fell by 22.90 won over the past two days (4th-5th).

The US Dollar showed weakness. The Dollar Index, which represents the value of the dollar against six major currencies, recorded 107.791, down 1.01% from the previous day.

Although the U.S. imposed an additional 10% tariff on China from the 4th and China also announced retaliatory tariffs on U.S. products, the expectation that tariffs could be deferred through talks between the two countries' leaders persisted. The U.S. not announcing retaliatory measures against China's retaliatory tariffs was also seen as adding to this expectation.

Foreign investors' net buying in the domestic stock market, due to the recovery of risk appetite, also exerted downward pressure on the exchange rate. On this day, the KOSPI closed at 2,509.27, up 27.58 points (1.11%) from the previous day. Foreigners net bought about 67.4 billion won in the stock market on this day.

As the Chinese Yuan and Japanese Yen showed strength, the Korean Won also followed suit. The People's Bank of China announced an appreciation of the Yuan on this day. The Yen-USD exchange rate showed a 1.35% decline to 153.27 yen.

As of 3:30 PM, the KRW-JPY cross rate is 942.29 won per 100 yen. This is up 73 jeon from the previous day's 3:30 PM base rate of 941.56 won.

Reporter Kang Jin-kyu josep@hankyung.com