Market Turmoil as Won-Dollar Exchange Rate Hits Five-Year High

The Seoul foreign exchange market was thrown into disarray on April 7, as the won-dollar exchange rate experienced its most significant surge in over five years. Closing at a staggering 1,467.8 won, the rate jumped by 33.7 won from the previous day, fueled by escalating fears of a trade war between China and the United States.

Trade War Concerns Take Center Stage
The trading session opened at 1,462 won, quickly peaking at 1,471.5 won. This dramatic rise was attributed to China's announcement of a 34% retaliatory tariff on U.S. goods, sparking concerns over a potential global economic disruption. "Today's exchange rate spike is directly linked to trade war anxieties," observed market analyst Lee Min-hyuk.

Political Instability Adds to Economic Woes

The situation was further complicated by the recent impeachment of former President Yoon Suk Yeol, which had previously caused the exchange rate to drop into the 1,430 won range. Lee noted, "The impeachment has heightened risk aversion, pushing the won to its limits. Without this political upheaval, rates might have exceeded 1,480 won."

Bank of Korea on High Alert

In response to the volatile market conditions, Yoo Sang-dae, deputy governor of the Bank of Korea, activated an "Emergency Response Task Force." Yoo highlighted the unpredictable nature of U.S. tariff policies, stating, "The uncertainty is significant and may persist longer than anticipated." Measures to stabilize the market are under consideration.

Yen Also Feels the Pressure
By 3:30 PM, the won-yen exchange rate had climbed to 1,008.21 won per 100 yen, marking its highest point since March 22, 2023. A market researcher explained, "The yen is viewed as the second safest haven after the dollar," indicating a shift towards more stable currencies in these uncertain times.