Won-dollar rate hits new normal level

The average won-dollar exchange rate reached 1,412.23 won as of Oct. 10, suggesting a high exchange rate has become the new normal. The figure surpasses the 1998 average of 1,394.97 won, recorded after the Asian financial crisis. If the trend continues, this year’s annual average is expected to hit a record high. The won is weakening even as the dollar shows signs of global decline.

According to the Bank of Korea, the average closing rate from Jan. 2 to Oct. 10 was 1,412.23 won per dollar. With two months left in the year, the annual average has already surpassed 1,400 won. The overnight closing rate early Friday reached 1,427 won. If the trend continues, the annual average is likely to remain above 1,400 won, marking the weakest won in history, even lower than in 1998.

The exchange rate hit a yearly high of 1,484.1 won on April 9, following the declaration of martial law late last year. It later stabilized in the 1,300-won range in May amid expectations of political calm before the presidential election. However, after talks with Washington stalled over South Korea’s $350 billion investment plan, the rate rose again above 1,400 won.

Park Hyung-jung, an economist at Woori Bank, said the rise reflects weak fundamentals in the Korean economy and that policymakers should view the 1,400-won range as a new equilibrium requiring long-term measures.


한재희 기자 hee@donga.com