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“It’s companies and foreign investors selling off dollars that are driving the dollar down,” said Gu Gil-mo, a foreign exchange dealer at Korea Exchange Bank. “The expectation that it will keep falling is so widespread in the market that the government alone cannot cope with the situation."

In January, the won gained 4.9 percent against the greenback and 4.3 percent against the Japanese yen. While the dollar is falling around the world, its drop against the won over the past three years has been an exceptionally steep 22 percent. In contrast, the yen actually lost 5.6 percent over the same period and the Chinese yuan gained only 1.8 percent against the U.S. currency.

Experts predict the decline will continue since the Fed’s rate-hike cycle is expected to draw to a close in the first half of this year and the U.S., which has suffered a massive trade deficit, will pressure East Asian countries with ample surpluses to raise the value of their currencies.

Another reason the trend will last is that foreign investors have turned to non-dollar assets in emerging markets, while Korean exports will grow, if not to the record levels seen last year, and keep glutting the market with dollars, a researcher with Samsung Economic Research Institute said.

Private economic think tanks here have adjusted their exchange rate forecasts for the year to around W950 to the dollar, down from W1,000. SERI predicts W960, the Hyundai Economic Research Institute W980, and the Korea Institute of Finance W950.

However, the Bank of Korea says all this is temporary. In an interview on Jan. 12, central bank Governor Park Seung said there were no factors to drive the dollar down further overall this year. Last year, a dollar on average bought W1,024.

(englishnews@chosun.com )