Credit: Public domain.
The long-suffering Korean won took another blow as it hit a two-year low on November 12, at KRW 1403.5 per USD 1. The won’s value has been depressed over the last several years because of South Korea’s wobbly economy, paired with the Bank of Korea 한국은행’s decision to keep interest rates relatively low to protect the real estate market. (See previous coverage, “The Triple Quandary.”)
The election of Donald Trump as the next US president spiked the demand for USD. Trump’s proposals for immigration crackdowns and higher tariffs are likely to cause greater inflation, which in turn would push the US Federal Reserve to keep the benchmark interest rate high, drawing in USD. The strength of the US stock market relative to the South Korean market is also causing investors to sell KRW in favor of USD.
