The Korean won s exchange rate against the U.S. dollar is persistently exceeding its annual peak, propelled by the resilience of the American economy, which has buoyed the dollar against global currencies.
The Korean economy appears destined to continue experiencing the negative impact of high U.S. interest rates following the U.S. Federal Reserve’s hawkish pause on its policy rates, according to analysts, Thursday. The Fed on Wednesday left its benchmark lending rates unchanged at a range of 5.25 percent to 5.5 percent for the second straight meeting since July.
The weakening of the Korean won against the U.S. dollar this month has raised questions over whether the Bank of Korea (BOK) should consider resuming rate hikes after keeping the base rate steady since January.
The Korean currency weakened nearly 60 won against the U.S. dollar this month alone and dipped to the 1,300 won level, after managing to stay in the 1,200 won level even after the Korea-U.S. interest rate gap widened to a record high of 2 percentage points in late July.
The Korean won is anticipated to lose ground against the U.S. dollar only for a short term as it settles at the mid-1,200 level per dollar, in the wake of Fitch Rating s downgrade of the U.S. credit rating, analysts said Thursday.