The weekly forecast is neither a guarantee nor a promise of accuracy and is intended to give our readers information on the forecasted foreign exchange rate from the bank each week.
With the U.S. and other Western allies stepping up economic sanctions against Russia, the Ukraine-Russia conflict is likely to be prolonged. On the other hand, Fed officials are expected to give a speech this week, through which market players can guess how the Fed is reflecting the Ukraine crisis on its policy including the extent of rate hikes.
In the short run, risks stemming from eastern Europe will likely push up the KRW-USD rate to the 1, 200s range. But the slope of the increase might be a bit gentle, given the possibility that demand for riskier assets could grow depending on the result of the Ukraine-Russia talks.
Krw Usd Monthly Exchange Rate 2023
The Korean won opened the week up amid expectations of a diplomatic solution to the Ukraine crisis following news that the U.S. and Russia had agreed to hold a summit.
At mid-week, escalating geopolitical tensions in eastern Europe added to the upward pressure on the KRW-USD exchange rate. As investors regained risk appetite somewhat amid expectations that the crisis would not lead to an actual invasion, the Korean won’s loss was limited.
Later in the week, the KRW-USD exchange rate jumped on news of Russia’s invasion of Ukraine. It then fell slightly before closing out the week on the back of expectations of diplomatic efforts to resolve the crisis.
K Netizens Are Concerned The Value Of Korea's Currency (won/krw) Keeps Falling Against The Us Dollar
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Haps Korea Magazine features stories of people from all walks of life in Korea, covering news and trends in lifestyle, society and whatever else is happening on the peninsula.By Yi Whan-woo With the Korean won bouncing back against the U.S. dollar, there is growing attention to whether the local currency will continue to gain ground against the greenback, on the back of a string of events this week in the United States and China that raise hope for relief from U.S. inflation as well as the dollar's decline. The won has remained at the 1, 400-won level for more than a month, adding to concerns over economic turmoil in Korea, as this level has only been observed twice before: during the 1997-1998 Asian financial crisis and the 2008-2009 global financial crisis. Under these circumstances, the Korean currency gained strength against the greenback for the second trading session, Tuesday. The won-dollar exchange rate ended at 1, 384.9 won, down 16.3 won from a day earlier after opening at 1, 394.5 won and remaining below 1, 400 won throughout the session.
Korean Won Emerges As More Stable, Less Volatile Currency
U.S. President Joe Biden, right, shakes hands with Maryland Democratic gubernatorial candidate Wes Moore during a rally for the Democratic Party on the eve of mid-term election day at Bowie State University in Bowie, Maryland, Monday. EPA-Yonhap
Analysts said that the won's ascent can be attributed to the U.S. midterm elections, Tuesday, in which the Republicans could make gains in the House of Representatives. The possible gains could mean a curb on the Joe Biden administration's spending, which ―while strengthening the safety net for low-income groups, pandemic-related support and investments in infrastructure ― has been criticized by Republicans for fanning inflation that reached four-decade high of 9.1 percent in June. U.S. inflation has shown no signs of cooling and has remained above market forecasts, with 8.5 percent in July, 8.3 percent in August and 8.2 percent in September. U.S. inflation in October, which is scheduled to be announced Thursday, is anticipated to slip to 7.9 percent. A 7-percent-range inflation can be perceived as an optimistic sign, a Seoul economist said on condition of anonymity, adding, It may allow the U.S. Federal Reserve to take a breather on its aggressive credit tightening in its next rate-setting meeting. The economist was referring to the Fed's December rate-setting meeting from Dec. 13 to 14, which takes into account the October inflation rate in the decision-making process. The Fed delivered the fourth 75-basis-point hike so far this year, raising the once near-zero base rate to the range of 3.75 percent to 4 percent as of November. While the Fed's rate hike added to the persistently strong dollar, some believe that China could be gearing up to shift away from its zero-COVID policies, so in return, it is drawing the attention of investors who prefer safer haven assets such as the U.S. dollar. The market speculates that the Chinese government will find it tough to maintain its lockdown policies, so that is likely to lead to a fall in the dollar's value, said Kim Seung-hyuk, a researcher at NH Futures.
U.S. President Joe Biden, right, shakes hands with Maryland Democratic gubernatorial candidate Wes Moore during a rally for the Democratic Party on the eve of mid-term election day at Bowie State University in Bowie, Maryland, Monday. EPA-Yonhap
Analysts said that the won's ascent can be attributed to the U.S. midterm elections, Tuesday, in which the Republicans could make gains in the House of Representatives. The possible gains could mean a curb on the Joe Biden administration's spending, which ―while strengthening the safety net for low-income groups, pandemic-related support and investments in infrastructure ― has been criticized by Republicans for fanning inflation that reached four-decade high of 9.1 percent in June. U.S. inflation has shown no signs of cooling and has remained above market forecasts, with 8.5 percent in July, 8.3 percent in August and 8.2 percent in September. U.S. inflation in October, which is scheduled to be announced Thursday, is anticipated to slip to 7.9 percent. A 7-percent-range inflation can be perceived as an optimistic sign, a Seoul economist said on condition of anonymity, adding, It may allow the U.S. Federal Reserve to take a breather on its aggressive credit tightening in its next rate-setting meeting. The economist was referring to the Fed's December rate-setting meeting from Dec. 13 to 14, which takes into account the October inflation rate in the decision-making process. The Fed delivered the fourth 75-basis-point hike so far this year, raising the once near-zero base rate to the range of 3.75 percent to 4 percent as of November. While the Fed's rate hike added to the persistently strong dollar, some believe that China could be gearing up to shift away from its zero-COVID policies, so in return, it is drawing the attention of investors who prefer safer haven assets such as the U.S. dollar. The market speculates that the Chinese government will find it tough to maintain its lockdown policies, so that is likely to lead to a fall in the dollar's value, said Kim Seung-hyuk, a researcher at NH Futures.
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