"Exchange Rate Drops 15.7 Won as U.S.-China Tensions Ease, Reaches Lowest Level Since Martial Law"

# Weekly Closing: Won/Dollar Exchange Rate Drops to 1,405.3 Amid Eased U.S.-China Tensions (SEOUL) – The South Korean won experienced its steepest decline in five months against the U.S. dollar, bolstered by easing U.S.-China trade tensions, marking the most significant drop since martial law was implemented late last year. On May 2, the won closed at 1,405.3 against the U.S. dollar in the Seoul foreign exchange market, a decline of 15.7 won from the previous day’s closing price. This weekly closing level is the lowest since December 3 of the previous year, when the exchange rate hit 1,402.9 won on the day martial law was declared. Initially, the exchange rate surged in the morning, opening 15.0 won higher at 1,436.0 due to domestic political instability and a stronger dollar. It reached a peak of 1,440.0 in early trading before pulling back. Political instability in South Korea escalated following the resignations of Han Duck-soo, former Prime Minister, and Choi Sang-mok, former Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance. Kim Beom-seok, Acting Minister of Economy and Finance, calmed markets by stating, “To mitigate the impact of political uncertainties on financial and foreign exchange markets, we will maintain 24/7 crisis monitoring and response measures centered on the ‘F4 Committee.’” # Market Volatility and Recovery The exchange rate retraced its earlier gains and dipped into negative territory in the afternoon, reaching an intraday low of 1,403.5, nearing the critical 1,400-won barrier. The weekly fluctuation between the high and low exchange rates was 34.7 won, the highest volatility since November 11, 2022, when the gap was 37.4 won. The easing U.S.-China trade tensions added downward pressure to the won/dollar exchange rate. A spokesperson for China’s Ministry of Commerce stated, “The U.S. has sent active signals multiple times through relevant departments, expressing their willingness to engage in dialogue with China,” noting that these messages are being evaluated. On May 1 (local time), U.S. Secretary of State Marco Rubio confirmed in an interview with Fox News that back-channel discussions with China over trade were happening. He remarked, “China has approached the U.S., expressing interest in meetings and negotiations.” # Regional Currency Performance The improved trade outlook strengthened other regional currencies against the U.S. dollar. Offshore yuan traded at 7.2444 per dollar, up 0.22% from the previous day, while the Taiwanese dollar surged 3.41%, closing at 30.783 per dollar. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, remained steady, hovering at 99.872. As of 3:30 PM local time, the won/yen cross-currency rate was at 968.30 won per 100 yen, down 28.47 won from the previous session’s level of 996.77 won. In contrast, the yen rose against the dollar, trading at 145.122 yen per dollar, a 1.82% increase from the previous day.