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Photo = Yonhap news |
[Alpha Biz= Paul Lee] The Korean won has dropped to its lowest level in over four months, trading at 1,418.9 won against the US dollar on Thursday.
On this day, the won-dollar exchange rate closed 7.8 won lower compared to the previous trading day. This marks the lowest level since December 5 of last year, when it stood at 1,415.10 won, based on weekly closing data.
The exchange rate opened at 1,416.0 won, down 10.7 won from the previous day, largely influenced by a global weakening of the dollar. This was the lowest opening rate since December 6 of last year, when it was 1,414.7 won. Following the Bank of Korea's decision to hold its base interest rate steady, the rate briefly rose to 1,423.3 won, but it gradually decreased and closed in the 1,410 won range by the end of the day.
The Bank of Korea decided to keep its base interest rate at 2.75% per annum, but it left open the possibility of a rate cut in May due to increasing risks to the economy, signaling a "dovish hold." The market reaction to this decision was minimal, though the exchange rate closely mirrored the weaker dollar.
The US dollar has been weakening due to concerns over a potential recession linked to President Donald Trump’s tariff policies and hawkish remarks by Federal Reserve Chairman Jerome Powell.
The dollar index, which measures the dollar against six major currencies, dropped by 0.77% to 99.38 on April 16, marking its lowest point since April 2022. Earlier, on April 11, the dollar index fell below 100 for the first time since July 2023.
As of April 15, the dollar index has dropped by 7.69% this year, marking its largest decline for the period since 1995, according to market data provider FactSet.
In a speech on April 16, Chairman Powell raised concerns about stagflation (economic stagnation with rising inflation), but firmly ruled out further market interventions by the Federal Reserve. His hawkish stance on tightening monetary policy contributed to the decline in the dollar's value.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
