Scroll Top

Fluctuation of Korean won exchange rate

Photo: Unsplash.com

Since the beginning of 2024, the Korean won has experienced a significant depreciation against the US dollar, falling by 5.5% cumulatively, which is particularly prominent among Asian currencies. The reasons for this exchange rate depreciation can be attributed to two main factors. Firstly, the Federal Reserve’s continuous interest rate hike policy has tightened global liquidity, resulting in the appreciation of the US dollar and the relative depreciation of other currencies. As an important economy in Asia, South Korea’s currency has also inevitably been affected by this trend. Secondly, some internal economic factors in South Korea have also exacerbated the depreciation pressure on the Korean won. For example, the rapid growth of South Korean corporate debt, especially in the real estate sector, as well as the survival crisis faced by small and medium-sized enterprises, have put considerable pressure on the South Korean economy, further affecting the Korean won’s exchange rate.

In response to this economic hot topic, the South Korean government has taken some measures to stabilize the exchange rate. For instance, the Bank of Korea has intervened in the market, adopting measures to prevent further depreciation of the Korean won. However, due to the uncertainty in the global market and the continued strength of the US dollar, the effectiveness of these measures has been limited.
From a more macro perspective, this economic hot topic in South Korea also reflects the complexity of the current global economic situation. In the context of globalization, economies around the world are interconnected, and fluctuations in one country’s economy often trigger chain reactions. Therefore, South Korea needs to continue to closely monitor changes in the global economic situation, strengthen cooperation with other countries, and jointly address various challenges.
South Korea also needs to strengthen the adjustment of its internal economic structure, optimize its industrial structure, and improve the quality and efficiency of economic growth. Only by doing so can South Korea fundamentally enhances its resilience to risks and reduces the impact of exchange rate fluctuations on the economy.
By Liu Yilin

Related Posts