The South Korean won has reached its highest average exchange rate against the U.S. dollar since the 1998 IMF crisis [5].
This currency depreciation signals a significant loss of confidence among global investors in Korean equities. The resulting volatility affects everything from national trade balances to the cost of travel for ordinary citizens.
During the second quarter of 2024, the average won-dollar exchange rate hit 1,490.98 won [4]. This represents a 28-year high for the currency [5]. The volatility intensified recently, with the exchange rate rising more than 100 won compared with a month earlier [1].
Market activity showed extreme spikes in specific trading windows. The weekend night-trade rate briefly crossed 1,560 won per dollar [2]. For those purchasing currency for travel, the impact was even more pronounced; airport cash-exchange rates exceeded 1,620 won per dollar [3].
Financial analysts attribute the decline to massive capital outflows. Foreign investors sold a record 44.7 trillion won in net equities during May 2024 [6]. The trend continued into June 2024, with an additional 18 trillion won leaving the market in the first four trading days of the month [7].
Kim Tae-min, a reporter for YTN, said the exchange rate at airport counters had already surpassed 1,620 won [3]. He said that net sell-offs by foreigners in May broke previous monthly records [6].
“The South Korean won has reached its highest average exchange rate against the U.S. dollar since the 1998 IMF crisis.”
The surge in the won-dollar exchange rate, coupled with record-breaking equity outflows, suggests a period of acute financial instability. When foreign investors liquidate assets on this scale, it creates a feedback loop where the selling of stocks necessitates the selling of the local currency to repatriate funds, further weakening the won. This level of depreciation—not seen since the late 1990s—increases the cost of imports and puts significant pressure on the South Korean central bank to intervene to prevent a systemic currency collapse.
