[Young Journalist Yumin Chung] As the Korean won exceeded 1550 won against the dollar as in intraday trading, the highest exchange rate is impending just after the global financial crisis. The authorities have put in ₩50 trillion worth of dollar and liquidity into the market over a semester. Even so, the intervention has been ineffective in counteracting the surging pressure on the dollar. Continued depreciation of yen and expectations of monetary restrictions by the Federal Reserve have also consistently weighed on the won. The market forecasts that Korea is entering the phase of structural elevation in exchange rates, along with some analysts and investors mentioning that the currency may surpass 1600 won.

On July 1st, the foreign exchange market opened trading at a rate of ₩1,549.8 per dollar, 0.4 won higher compared to the last session that closed as ₩1,549.4 per dollar. In early stages of trading, the won weakened even further, reaching ₩1,551.7 by 9:30 a.m. Previously having experienced the peak closing level at March 6th 2009 during the global crisis, the currency had already exceeded past the ₩1,550 threshold just a day after the trading opened. This evidence of rapidly debilitating currency is endangering the market with a foreboding exchange rate of ₩1,560 per dollar.

The broad picture of the first and second quarters still depicts the prolonged elevation of exchange rates. The won averaged ₩1,484.56 per dollar in the first two quarters, while only the second quarter averaged ₩1,501.64. These statistics represent both the highest half-year average and quarterly average since 1998 during the Asian financial crisis. Along with the reignited expectations for the Federal reserve to continue on monetary restrictions, the U.S. Dollar Index (DXY) elevated above 101 against a group of major currencies. On the other hand, the yen proceeded to depreciate steeply, reaching the exchange rate of ¥162 per dollar. This is also the yen's highest level since December 1986, just after the Plaza Accord. Both the reinforced dollar and weakened yen have contributed to the overwhelming pressure on the won. 

Moreover, what is heavily concerning is that the won is depreciating regardless of any market intervention by the foreign exchange authorities. According to the Bank of Korea’s report on the foreign-exchange market stabilisation records for the first quarter of 2026, –US$13.63 billion was measured as the net foreign transaction. A negative net transaction record suggests that the authorities have been selling US dollars in order to prevent the depreciation of the won, ranking as the fourth largest quarterly intervention on record. Added to the historical record US$22.47 billion in net dollar sales during last year’s fourth quarter, the authorities injected around US$36.1 billion over a semester in an effort to pre-empt the depreciation of the won.  

Further heavy interventions by the government have failed to protect the won is raising concerns that it is only promoting a self-reinforcing cycle. Now, Korean investors seek overseas investments, foreign capital flows out endlessly from the domestic market, and companies are in a rush to purchase dollars for the purposes of settlement and import. Further increase in demand for dollars has been recorded. Analysts expect that the won would rise above ₩1,600 per dollar due to the continued restrictive monetary stance by the Federal Reserve. This is likely to soar import prices and production costs across the whole economy, eventually amplifying consumer inflation. However, mitigated portfolio rebalancing and SK Hynix’s planned U.S. ADR listing in the future may boost dollar inflows and neutralize the foreign exchange market conditions.

Meanwhile, the Bank of Korea has been criticized that it has escalated market anxiety by foreign exchange reserves still remain sufficient despite increasing strain on the won. The central bank is currently presenting solid external fundamentals. This includes net external assets, manageable external liabilities and an ongoing trade surplus. However, analysts state that reassurances are inadequate as reserves decline below US$430 billion by the end of May. Currently, there are endless calls for detailed investigation of the possible risks caused by continued currency depreciation. 

▶원문 기사 : 환율 '금융위기 수준' 1600선 넘나…한은 "외환 보유액 충분" (이코노미스트, 2026. 7. 1)

◆이코노미스트가 글로벌 차세대 경제 리더, 청소년 기자단 영 저널리스트와 함께합니다. 영 저널리스트 기자단은 프리미엄 경제지 이코노미스트, 논술 전문 기관 Ni 에듀케이션과 함께 주요 시사 이슈를 팔로우업하고 직접 기획, 취재, 기사 작성 활동을 하며 사회적 문제를 고심하고 해결 방안을 제시하는 과정을 경험하게 됩니다. 이번 기사는 영 저널리스트 기자단이 이코노미스트 기사를 영문으로 번역하며 이슈를 팔로우업한 기사입니다. 차세대 글로벌 경제 리더, <영 저널리스트 with  이코노미스트> 영문 기사는 매주 연재됩니다.


 

ⓒ이코노미스트(https://economist.co.kr) '내일을 위한 경제뉴스 이코노미스트' 무단 전재 및 재배포 금지