Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Trump risk pushes won-dollar rate toward 1,400 won level
A screen on the wall shows the won-dollar exchange rate and financial data at a dealing room at Hana Bank's headquarters in central Seoul, Thursday. Yonhap
By Yi Whan-woo
The Korean won is weakening toward the 1,400 level against the U.S. dollar, over the possibility of former U.S. President Donald Trump’s return to the White House.
The local currency closed at 1,380.2 won per dollar, Thursday, strengthening by 2 won from the previous day and snapping an eight-day losing streak.
Analysts, however, said the won could fall against the dollar as the U.S. presidential election on Nov. 5 approaches, pointing out it depreciated by nearly 5 percent this month.
In particular, it finished at 1,382.2 won per dollar, Wednesday, depreciating below the 1,380 level for the first time since late July over increasing bets on Trump’s reelection.
Trump’s chances of winning rose to 66 percent against his contender, U.S. Vice President Kamala Harris, in a prediction made by election betting platform Polymarket, Tuesday.
“The dollar is anticipated to stand tall over such bets, and thus I would leave the possibility open that the won touches the psychological threshold of 1,400,” Hana Bank researcher Seo Jung-hoon said.
Park Sang-hyun, a researcher at iM Securities, voiced a similar view, noting that Trump advocates for trade protectionism and openly calls for imposing higher tariffs on foreign goods entering the U.S.
“He calls 'tariff' the most beautiful word in the dictionary,” Park said, referring to Trump’s remark during an event at the Economic Club of Chicago on Oct. 15, when he floated levying a 20 percent tariff on all goods from all countries, with an especially high 60 percent rate on Chinese imports.
“The higher tariff would weaken competence of an export-dependent Korean economy, which would result in further depreciation of its currency against the dollar,” Park explained.
Goldman Sachs, a global investment bank, speculated Trump’s tariff policy would batter the Korean economy and that it would lower the country’s GDP growth rate by nearly 1 percent.
Of the 38 nations surveyed by Goldman Sachs, Korea was third-last, after Singapore and Switzerland, among the countries that are anticipated to take the most severe hit by the former U.S. leader’s tariff policy.
Kwon Ah-min, an analyst with NH Investment & Securities, said a possible Trump victory means higher uncertainty for the global economy and investors’ stronger preference for safe haven assets.
“Overseas investors would pull out their cash from Korea, which, in turn, would weaken the won against the dollar toward the 1,400 level,” Kwon said.
Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok said the possibility of the won hitting 1,400 per dollar should be seen as different from cases in the past, including the Asian financial crisis in the late 1990s.
Speaking before Korean correspondents during a trip to New York, Tuesday, Choi said the circumstances concerning the current won-dollar exchange rate are “qualitatively different from those during the financial crisis and is not very worrisome.”