Won-Dollar Exchange Rate Skyrockets Amid Market Volatility

March 31 - The Seoul foreign exchange market witnessed the won-dollar exchange rate climb to a staggering 1,472.9 won, marking the highest level since the financial crisis. This significant increase of 6.4 won from the previous day's close represents a 15-year and nine-month peak, reminiscent of the 1,483.5 won recorded on March 13, 2009.

Market Turbulence Follows Resumption of Short Selling

The exchange rate's surge occurred alongside a dramatic 3% drop in the KOSPI index, which fell below the 2,500 threshold. This downturn was fueled by the resumption of short selling and growing apprehensions over potential new tariffs by the Trump administration, set to be announced on April 2.

Expert Insights on the Exchange Rate Spike

Wi Jae-hyun, a researcher at NH Futures, attributed the exchange rate's rise to "the uncertainty surrounding domestic impeachment proceedings and a surge in net foreign stock sales." Despite a global trend of dollar weakening and the simultaneous strengthening of currencies like the yen and yuan, Wi emphasized that upcoming U.S. tariff policies would be crucial in determining future movements.

Looking Ahead: A Challenging Environment for South Korea's Economy

The combination of resumed short selling and political uncertainty presents a complex scenario for South Korea's export-driven economy, which is highly sensitive to shifts in global trade policies and exchange rates. "As long as the unstable environment, such as the Trump administration's tariff policies, persists, the demand for dollars will not decrease, thus the won-dollar exchange rate is structurally open to an upward trend," Wi concluded.