Yen Strength Continues, Approaching 1,000-Won Level; Won Weakens Amid Uncertainties

# Yen Breaks 990 Won Barrier, Poised to Surpass 1,000 Won The yen's exchange rate against the won has surged past the 990-won mark, with a strong possibility of breaching the 1,000-won level in the short term. This development results from a combination of rising expectations for an interest rate hike by the Bank of Japan (BOJ), forecasts of interest rate cuts in South Korea due to economic sluggishness, and political instability. Experts anticipate the yen's strength to persist for the time being. As of the 12th, the Bank of Korea reported the won-yen exchange rate at 993 won per 100 yen, marking a 45 won increase since the beginning of the year. This is the highest level since late April of the previous year. In some bank branches, the 1,000-won mark was already surpassed as of the 10th. # Main Factors Behind Yen's Strength The primary driver of the yen's appreciation is the expectation of further interest rate hikes by the BOJ. After raising the short-term interest rate last March for the first time in 17 years, the BOJ has implemented additional hikes this year. There is speculation that more rate hikes might be discussed at the upcoming monetary policy meeting on the 18th-19th. In January, Japan’s Consumer Price Index rose by 4% year-over-year, maintaining inflationary pressures. BOJ Deputy Governor Shinichi Uchida stated, "As long as the economy and prices remain stable, we will continue to raise rates." The weakening of the dollar has also supported the yen's strength. With growing expectations for an interest rate cut by the U.S. Federal Reserve, the dollar index has fallen from 110 at the beginning of the year to around 103 recently. The yen, which traded at approximately 158 yen per dollar late last year, has strengthened to around 146 yen per dollar now. # Weakening Won Amid Economic and Political Concerns Meanwhile, the won has been depreciating due to concerns over economic performance and political instability. The Bank of Korea has lowered its economic growth forecast for this year to 1.5%, and major financial institutions are also predicting a bleak outlook. Factors such as potential tariffs from the U.S. on Chinese imports and vulnerabilities in South Korea's export industries contribute to the weakening won.