With concerns about high interest rates being a long-term trend spreading across the global financial market, the won-dollar exchange rate has risen ceaselessly, hitting a yearly record high day after day. In response, the South Korean government implied that it will step into the foreign-exchange market as a quick fix.
The won-dollar exchange rate on Wednesday finished at 1,349.3, 0.8 up from the previous trading day, reaching another new high of the year. It even went up to 1,356.0 within the day, marking the highest point in 10 months since it spiked to an intraday rate of 1,356 on Nov. 21 last year.
The foreign-exchange market appears to be fluctuating severely as the Federal Reserve's projections that high interest rates will continue for the longer term led the U.S. dollar to gain ground. What's worse, another concern spreading across the financial market is that the U.S. federal government is headed into a shutdown.
With everyone seeing the writing on the wall that interest rates will remain high for some time, the U.S. 10-year government bond exceeded 4.56 percent during the intraday trade on Tuesday, hitting a new record high in 16 years since 2007. The Dollar Index, a relative value of the U.S. dollar measured compared to a basket of six influential currencies, spiked to the highest point of 106.21 since Nov. 30 last year.
The government suggested that if currency fluctuations worsen it would make interventions in the foreign-exchange market. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said on Wednesday, “Authorities will respond immediately to any speculative trends arising or market instability increasing for no particular reason.”