Won Falls to W1,300 to the Dollar

The Korean won weakened to more than W1,300 to the U.S. dollar on Thursday for the first time in 13 years. The won closed down W4.50 at W1,301.80 against the greenback after reaching new lows for four days running.

The last time it closed over W1,300 was on July 13, 2009 in the wake of the global financial crisis. Even in March 2020, when the coronavirus pandemic rattled financial markets, the won only fell to W1,285.70.

The dollar is expected to strengthen further after the U.S. Federal Reserve hiked the key interest rate by 0.75 percentage points to the highest level in 28 years, which has led to a surge in demand for safe-haven dollars amid financial jitters stoked by Russia's invasion of Ukraine.

The selloff of Korean stocks is also weakening the won further as foreign investors exit the market and exchange their money into dollars.

The Korea Composite Stock Price Index closed down 1.22 percent on Thursday at 2,314.32 points, another new low for the year.

Analysts say it will take some time before the won stabilizes. Inflation is rising around the world, while the Fed continues to hike interest rates. 

Suh Jung-hoon at KEB Hana Bank said, "We need to see clear signals that U.S. consumer prices peak out before the won stabilizes."