SEOUL, May 13 (Yonhap) – The South Korean won experienced a significant depreciation against the U.S. dollar on Wednesday, driven by persistent geopolitical uncertainties in the Middle East and higher-than-anticipated inflation figures from the United States.
The local currency commenced trading at 1,493.8 won per dollar, marking a 3.9 won decline from its closing rate in the preceding session. The won has displayed considerable volatility in recent trading periods, largely attributed to the stalled progress in negotiations between Washington and Tehran aimed at de-escalating regional conflicts.
Notably, the won had already seen a substantial drop of 17.5 won on Tuesday, closing at 1,489.9 won. This marked its lowest valuation since April 4, when the exchange rate stood at 1,504.2 won per dollar.
US Inflation Fuels Rate Hike Concerns
Adding to the economic headwinds, overnight data from the U.S. revealed a sharp rise in consumer prices for the second consecutive month in April. This surge represented the largest annual increase in inflation in nearly three years, intensifying market expectations that the Federal Reserve will maintain its current interest rates for the foreseeable future.
Geopolitical Tensions Drive Oil Prices Higher
Further exacerbating the situation, ongoing concerns regarding the potential for prolonged conflict between the U.S. and Iran have driven West Texas Intermediate (WTI) crude oil prices above US$102 per barrel. Elevated oil prices exert downward pressure on the won, as South Korea, being heavily reliant on energy imports, experiences increased demand for U.S. dollars to finance these crucial purchases.
KOSPI Dips Amid Foreign Selling
Reflecting the heightened market anxieties, the benchmark Korea Composite Stock Price Index (KOSPI) registered a decline of 2.46 percent, settling at 7,447.17 as of 9:30 a.m. Wednesday. This downturn was primarily driven by significant foreign selling pressure.
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