Foreign Exchange
Korea’s foreign exchange market volatility has reached a three-year high based on expectations for an interest rate hike in the United States.
According to a Bank of Korea report released on April 16, the range of fluctuation and the fluctuation rate of the Korean currency vis-à-vis the U.S. dollar were 6.8 won and 0.62 won on an average day in the first quarter of this year, respectively. The former was second only to that of the fourth quarter of 2011, when the number amounted to 9.3 won. The range of fluctuation can be defined as the difference between the highest and lowest values for one day. The day-on-day range and rate were 5.2 won and 0.47 won each.
By month, the range of fluctuation was as high as 7.7 won in January, while it slightly reduced to 6.4 won in February and 6.1 won in March.
In January this year, the won-dollar exchange rate dropped to 1,077.3 won per U.S. dollar, as the expectations for the Fed’s interest rate hike lowered and the Korean currency was synchronized with a strong yen. The next month, the expectations revived and the forex rate climbed to 1,110.7 won per U.S. dollar amid concerns over a Greek default.
Last month, the rate rose to 1,131.5 won on March 16 after the Bank of Korea cut the key rate. However, the increment decreased after the FOMC meeting.