Exchange Rates
As of 3:55 pm on August 26, the won-yen arbitrage rate of exchange reached 978.82 won per 100 yen, a 1.58 won decrease from the closing value of that day at 6 am.
The won-yen exchange rate broke the 1,000 won level at the end of last year, and dropped 978.41 won on August 25 for the first time in six years. Afterwards, the exchange rate stayed around the 970 won level for two consecutive days.
This phenomenon is largely due to crossing movement of the Korean won and Japanese yen against the appreciation of the U.S. dollar. Depreciation of the yen is caused by the expectations of additional quantitative easing in Japan.
On the contrary, currencies of emerging countries in Asia, including Korea, have not really depreciated relatively, following the expectations of quantitative easing on major countries such as Japan and Europe. On that day, the closing value of the won-dollar exchange rate was 1,016.8 won per dollar, a 3.4 won decrease from the closing value of the previous day, as appreciation of the U.S. dollar slowed a little.
Right before the end of month, export companies sold a lot of dollars, and long stop – the settlement of dollar long positions – quantities also exerted downward pressures.