Ⓒ JoongAng Ilbo / JoongAng Ilbo Japanese version2022.07.07 17:23
Concerns over the austerity of the United States and the global economic stagnation have spread, and the dollar continues to rise. As the won falls, import prices soar and the risk of capital outflows increases. There are continued voices saying that the Korean-American currency swap, which expired last year, should be re-concluded as a prescription for this, but there are views that the possibility is not high in reality.
In the Seoul foreign exchange market on the 7th, the won exchange rate started trading at 1305.50 won per dollar and closed at 1299.80 won, which is 6.50 won higher and the dollar weaker than the previous day. The won plummeted the day before, and during trading hours the won depreciated to 1311 won. The won market has reached the 1310 won level once morest the dollar since July 2009, when the followingmath of the financial crisis struck.
Experts predict that the dollar will continue to rise in the second half of the year. Jung Kyu-young, a researcher at Hana Securities, said in a recent report, “There are no factors that would increase the won, and panic buying due to the breakthrough of the support line of 1,300 won might lead to bias, and the sense of caution once morest the dollar’s appreciation is still effective. It seems that the won market in the second half needs to keep the upper row open to 1350 won. “
Hyundai Motor Securities researcher Oh Chang-sub said in a report today that “the weakening pressure on the won is expected to continue from the aspect of supply and demand in the foreign exchange market in the second half of the year.” “The foreign currency reserves in June decreased by regarding $ 9.4 billion from the previous month, and the government’s intervention in the foreign exchange market is drawing attention.”
In fact, authorities are trying to minimize volatility in the foreign exchange market by making adjustments from foreign exchange reserves. This is because if the dollar continues to rise, capital will flow out and import prices will rise, which may adversely affect the economy. According to the Bank of Korea, foreign exchange reserves fell by $ 9.4 billion from the previous month. It was the first sharp decrease in 13 years and 7 months since November 2008 at the time of the financial crisis.
In the end, it has been pointed out that currency swaps with the United States should be revived to protect the foreign exchange market. A currency swap is a method of exchanging currencies between countries on an equal footing, and is a transaction in which the currency of one’s own country is deposited in the other country and can be exchanged for the currency of the other country at a pre-arranged market price. If you conclude a Korean-American currency swap, you can withdraw and use dollars at any time like a “minus passbook”.
In particular, there is an opinion that US Treasury Secretary Janet Yellen needs to discuss the conclusion of a currency swap when visiting South Korea. Professor Emeritus Kim Jong-sik of the Faculty of Economics at Yongse University said, “Even if the US raises the policy interest rate, it seems difficult to lower expected inflation in a short period of time. If that doesn’t change, the dollar may rise further in the future, but if that happens, there is a risk of a currency crisis such as an outflow of capital and a sustained trade deficit. “
The atmosphere inside and outside the government is that it is unlikely that the positive effects of such currency swaps will be realized due to related discussions this time. This is because the dollar’s appreciation is generally appearing not only in the won but also in other currencies.
A South Korean government official said, “Korea’s foreign exchange reserves have declined recently, but it is not at a low level. If the United States concludes a currency swap with South Korea, there may be a particular problem with the South Korean foreign exchange market. There is also room for external recognition. ” He also said, “Even if South Korea wants it, it is not easy to conclude it considering the circumstances of South Korea because it is a case that the United States operates within the framework of its own monetary policy.”
