Won-dollar rate back on roller coaster as 1,400-won mark looms

The Korean won has experienced a resurgence of volatility, erasing much of its recent gains against the U.S. dollar. Analysts attribute the recent fluctuations to a combination of tighter U.S. monetary policy, rising oil prices, and a decreasing supply of dollars in the local foreign exchange market. Over the past week, the won-dollar exchange rate has climbed nearly 50 won in seven consecutive trading sessions, reigniting interest in the 1,400-won mark.

This exchange rate has shown significant volatility in recent weeks, dipping to a 23-month low of 1,336.1 won per dollar on September 9 as major semiconductor exporters sold dollars, increasing the supply of foreign currency. However, this downward trend was halted for seven straight sessions, with the rate climbing 47.2 won from its September 9 close.

Tuesday saw a slight recovery, with the rate falling to 1,358.2 won per dollar onshore trading. The Federal Reserve's recent interest rate hike, amounting to a 25 basis point increase, has been a significant driver behind this renewed interest in the won-dollar exchange rate.