Won–Dollar Exchange Rate Back Above 1,500 Won Again: "Trend to Continue"

[Financial News] The US Dollar–South Korean Won exchange rate opened above 1,500 won once again. Analysts attribute this to a flight to safe-haven assets amid the unresolved crisis in the Middle East and the escalating airstrikes by the United States of America (US) and Israel against the Islamic Republic of Iran, as well as a sharp surge in global oil prices.
On the 23rd, the US Dollar–South Korean Won exchange rate started at 1,504.9 won, up 4.3 won from the previous trading day. Earlier, on the 19th, the rate had also opened higher at 1,505.0 won, a jump of 21.9 won from the previous session, before fluctuating and closing slightly lower at 1,501.0 won. It still finished above 1,500 won the following day as well, ending at 1,500.6 won.
The opening level on the 19th marked the highest since March 10, 2009, during the Global Financial Crisis (GFC), when the intraday rate reached 1,561.0 won.
As tensions in the Middle East intensified, US President Donald Trump further inflamed the situation with an ultimatum. On the 21st (local time), Trump warned on social media, "If the Islamic Republic of Iran does not fully open the Strait of Hormuz within 48 hours from now, the United States will strike and devastate Iran's largest power plant."
Signals that the crisis will drag on are driving demand into the dollar, the quintessential safe-haven asset. At the same time, this sustained pressure is pushing oil prices higher. On the 18th, prices for West Texas Intermediate (WTI) crude oil and Brent Crude Oil already climbed above 110 dollars and 100 dollars per barrel, respectively, during intraday trading. Some pessimistic forecasts now warn that if the end of the conflict keeps being pushed back, prices could break through 150 dollars and even surge toward 200 dollars.
Rising crude prices are stoking inflation, and the Federal Reserve System (Fed), which must prioritize stabilizing prices, may have little choice but to consider further interest rate hikes. After the Federal Open Market Committee (FOMC) left the policy rate unchanged at 3.50–3.75% this month, Chair Jerome Hayden Powell told a press conference that "the possibility of raising rates was discussed at this meeting as well as at the January meeting."
Park Sang-hyun, a researcher at iM Securities, stated, "As the risk of a prolonged period of high oil prices becomes a reality, the strong-dollar trend is likely to continue." He added, "While heightened caution among individual investors will likely limit the upside in the US Dollar–South Korean Won exchange rate, it is expected to remain in the 1,500-won range."
taeil0808@fnnews.com Kim Tae-il Reporter