Korean Won Weakens Against US Dollar, Falling 17.6 Won
Seoul, South Korea – The Korean won weakened against the US dollar on Tuesday,falling 17.6 won to close at 1,396.2 won per dollar. This marks a continued downward trend for the won, which has beenunder pressure in recent weeks due to a combination of factors, including concerns about the global economic outlook and rising US interest rates.
The won’s decline comesas investors remain cautious about the global economic landscape. The International Monetary Fund (IMF) recently lowered its global growth forecast for 2024, citing concerns about persistent inflation and geopolitical tensions. This has led to a flight to safety, withinvestors seeking refuge in the US dollar, considered a safe-haven asset.
Adding to the pressure on the won is the Federal Reserve’s aggressive interest rate hikes. The Fed has raised interest rates by a total of 5.25percentage points since March 2022, in an effort to combat inflation. Higher US interest rates make the dollar more attractive to foreign investors, leading to increased demand for the greenback and putting downward pressure on other currencies.
The won’s weakness has implications for the South Korean economy. A weaker won makesimports more expensive, which could lead to higher inflation. It also makes it more difficult for South Korean companies to compete in global markets.
Analysts are watching the situation closely and expect the won to remain under pressure in the near term. The direction of the won will likely depend on the trajectory of US interest rates, theglobal economic outlook, and the Bank of Korea’s monetary policy stance.
References:
- Yonhap News Agency (2024, November 6). 15:30 외환 환율: 1달러=1396.2원. Retrieved from https://www.yna.co.kr/view/AKR20241106000000004?input=1195m
- International Monetary Fund (2024). World Economic Outlook. Retrieved from https://www.imf.org/en/Publications/WEO
*Federal Reserve (2024). Federal Open Market Committee Meeting Minutes. Retrieved from https://www.federalreserve.gov/monetarypolicy/fomc.htm
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