South Korean Won Weakens Against US Dollar, Falling to 1,331.0 Won per Dollar
Seoul, August 27,2024 – The South Korean won weakened against the US dollar on Tuesday, reaching 1,331.0 won per dollar, markinga 4.2 won decline from the previous trading day. This latest dip comes amidst a broader trend of the won weakening against major currencies, reflecting concerns aboutthe global economic outlook and rising interest rates in the US.
The weakening won has been a consistent theme in recent months, driven by a combination of factors. The US Federal Reserve’s aggressive interest rate hikes have made the dollar more attractiveto investors, leading to a surge in demand for the greenback and consequently putting pressure on emerging market currencies like the won.
Furthermore, the global economic slowdown, particularly in China, South Korea’s largest trading partner, has dampenedinvestor sentiment towards the Korean economy. The slowdown in China’s economic growth has led to reduced demand for South Korean exports, impacting the country’s trade balance and putting downward pressure on the won.
The Bank of Korea (BOK) has been closely monitoring the situation and has taken steps to mitigate the impact ofthe weakening won. The central bank has raised interest rates in recent months to curb inflation and support the currency, but the effectiveness of these measures has been limited.
The weakening won has implications for various sectors of the South Korean economy. Exporters, particularly those reliant on the US market, may see their profits eroded astheir earnings in won are converted to dollars at a less favorable exchange rate. Conversely, importers will benefit from the weaker won as they can buy goods from overseas at a lower cost.
However, the weakening won also poses risks for the South Korean economy. It could lead to higher inflation as imported goods become more expensive,potentially eroding consumer purchasing power. Additionally, a sharp depreciation of the won could trigger a loss of confidence in the Korean economy, deterring foreign investment and potentially leading to a further decline in the currency.
The BOK is expected to continue closely monitoring the situation and adjust its monetary policy as needed to stabilize the wonand mitigate the risks associated with its depreciation. The government is also expected to implement measures to support exporters and businesses affected by the weakening won.
The future trajectory of the won remains uncertain, with the global economic outlook and US monetary policy continuing to play a significant role. Investors will be closely watching developments in these areas togauge the potential impact on the Korean currency.
【source】https://cn.yna.co.kr/view/ACK20240827002200881?section=economy/index&input=rss
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