Korean Won Opens at 1555.2 Won, Highest Since Financial Crisis

The won-dollar exchange rate opened at its highest level since the global financial crisis. The combination of a strong U.S. dollar, geopolitical tensions in the Middle East, and foreign capital outflows is intensifying pressure on the Korean won.

In the Seoul foreign exchange market on June 8, the won was trading at 1554.6 won per dollar as of 9:30 a.m.

The exchange rate started the day at 1555.2 won, an increase of 16.1 won from the previous trading day. This marks the highest level since March 6, 2009, when it reached 1590 won during the global financial crisis, a span of 17 years and three months.

On June 5, the U.S. reported a significant increase of 172,000 jobs in May, far exceeding market expectations. This has raised the likelihood of further interest rate hikes in the U.S., contributing to the dollar's strength.

Geopolitical tensions in the Middle East are also exacerbating the won's decline. Recent airstrikes by Israel on Lebanon have heightened uncertainty surrounding U.S.-Iran peace negotiations, increasing demand for the dollar as a safe-haven asset.

Foreign capital outflows continue, with foreign investors recording net sales for 20 consecutive trading days in the stock market. As of 9:04 a.m. on June 8, the net selling amount by foreigners was reported at 342.1 billion won.

The domestic stock market is experiencing a sharp decline, with the KOSPI index dropping more than 8% and falling below the 750-point mark, while the KOSDAQ index has also fallen below 1,000 points.

In response, the foreign exchange authorities held an emergency meeting the previous day to reaffirm their commitment to addressing the exchange rate volatility. However, market analysts suggest that the pressure from the strong dollar is overwhelming the impact of government intervention.

Earlier, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, Bank of Korea Governor Rhee Chang-yong, Financial Services Commission Chairman Lee Ok-won, and Financial Supervisory Service Chairman Lee Chan-jin convened an unscheduled emergency meeting to jointly address the exchange rate instability. The Bank of Korea and the Financial Supervisory Service plan to closely monitor speculative trading trends in the foreign exchange market and respond strictly if necessary.

Woori Bank economist Min Kyung-won noted, "As the exchange rate approaches 1600 won, export companies may delay their currency conversion decisions at the end of the quarter. However, if the authorities manage to curb the pace of the exchange rate increase through fine-tuning, there is a possibility of some high-point selling volumes entering the market."