Risk of Global Recession Increases
The rekindled trade war between the United States and China jolted the foreign exchange market in Seoul on Aug. 26. The U.S. dollar strengthened on investors’ increased preference for risk-free assets.
The won-U.S. dollar exchange rate opened at 1,1219.40 won at 9:10 a.m., up 8.80 won from the previous session, and closed at 1,217.80 won, up 7.20 won from the previous closing price, on Aug. 26. The figure even hit 1,220.80 won in early trading.
Market experts attributed the dollar strength to the escalation in the U.S.-China tariff fight over the weekend. Accordingly, the won-U.S. dollar exchange rate had a greater variability in a climate of global unrest.
Choi Seo-young, an analyst at Samsung Futures, said, “The reignited conflict between the United States and China has increased the risk of a global recession. Investors need to be wary of a decline in both stock prices and interest rates and a weak currency in emerging countries, including the yuan. We need to manage risks right now more than ever.”