The won became the only legal South Korean currency in March 1975. The currency was subsequently devalued by the Korean War and replaced by the hwan, before the won was reintroduced by the Bank of Korea (BoK), in June 1962 at a rate of 125 to the dollar. After the Second World War and the division of North and South Korea, the won was valued at 15 to the US dollar. The South Korean won is the official currency of the Republic of Korea. Higher interest rates make a country a more attractive investment destination, increasing demand for its currency. The US Federal Reserve’s (Fed) decision to aggressively raise interest rates at the fastest pace in decades in an attempt to bring down soaring inflation has been a key driver for the dollar this year. In 2022, the dollar’s safe haven status has lifted the US Dollar Index ( DXY) – which measures the value of the dollar against a basket of currencies – has skyrocketed to 20-year highs. Investors view the greenback, as it is also commonly known, as a safe haven asset to protect their wealth during times of economic volatility and geopolitical instability. In forex trading, the USD/KRW pair refers to how many South Korean won – the quote currency – are needed to buy one US dollar – the base currency.Īs the global reserve currency, the value of the US dollar is driven by trader sentiment on the performance of the global economy as much as by the domestic US economy. In this article, we look at the recent performance of the USD/KRW foreign exchange ( forex, FX) pair and some of the latest analyst forecasts. Will the won continue to shed value, or is it approaching a bottom? The sell-off is partially driven by a record South Korean trade deficit on the soaring cost of energy imports and slowing global demand for semiconductors, of which the country is the world’s largest producer. The won has dropped by 13% against the dollar year-to-date. Strength in the value of the US dollar ( USD) has lifted it to its highest level against the South Korean won ( KRW) since March 2009. What’s next for USD/KRW after the pair’s rate soared to 13-year highs on a record South Korea trade deficit, slowing global economy, rising inflation and a strong US dollar? Photo: An147yus / Shutterstock
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