Korea Exchange Rate


Won experiences fastest depreciation in almost three years

By 30 September, the Korean won (KRW) had depreciated 9.1% in nominal terms over the previous month and traded at KRW 1,174 per USD. The September drop was even larger than the 1.2% depreciation observed in August, when the KRW traded at 1,067 per USD. Moreover, the reading represented the fastest monthly depreciation since February 2009. As a consequence of the monthly drop, the KRW has now depreciated an accumulated 3.4% versus the USD this year and, at the current level, is trading 2.8% below the same month last year. The won weakened in September amid concerns of a global economic slowdown, which weighs heavily on Korea's economic prospects. Against this backdrop, both the Bank of Korea (BoK) and the government have stepped up measures to stabilise the currency. In an attempt to defend the won, the BoK has sold billions of dollars during last month. As a result, Korea's international reserves dropped from a record high of USD 312.2 billion in August to USD 303.9 billion in September. Furthermore, on 19 October, Korea and Japan agreed to expand the total size of an existing USD 13 billion currency swap arrangement to USD 70 billion. The deal includes the extension to USD 30 billion of an existing yen-won arrangement worth USD 3 billion, in addition to opening a new USD-local currency swap line worth another USD 30 billion. According to the Korean Central Bank, the extension of the currency swap ?is expected to mitigate the adverse influences of heightened uncertainty in the global market on Korea and Japan and contribute to enhancing regional financial stability.?

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