Korea: Korean won weakens moderately, but overall trend points to appreciation
July 16, 2014
The South Korean won (KRW) has been strengthening against the U.S. dollar and the Japanese yen since February of this year. In fact, at the beginning of July, after the country released data related to the external sector showing that exports rebounded in June, the Korean won nearly touched the psychological floor of KRW 1,000 per USD. On 3 July, the KRW reached a six-year high against the greenback: the currencies traded at KRW 1,008 per USD. This was 1.4% stronger than the level observed the same day of the previous month and 11.8% stronger than the level observed in the same month last year.
The KRW did, however, lose some of the ground gained and it dropped nearly 1.0% to reach KRW 1,027 per USD on 15 July on suspicions that the Korean Central Bank intervened in the country’s foreign exchange market. In addition, the Korean currency lost strength following the government’s downward revision to the country’s GDP growth outlook for this year from 4.0% to 3.8%.
Author: Ricardo Aceves, Senior Economist