"Prolonged High Exchange Rate Likely... Overseas Investment Expands Upward Pressure on KRW-USD"

There is analysis suggesting that the high KRW-USD exchange rate is likely to persist for a considerable period.

On July 3, the trading room electronic board at the Hana Bank headquarters in Jung-gu, Seoul, displays market conditions including the KOSPI, exchange rates, and KOSDAQ. 2026.07.08 Photo by Dongju Yoon

On July 4, Park Haesik, Senior Research Fellow at the Korea Institute of Finance, stated in the report "Assessment of the Potential Structural Upward Shift in the KRW-USD Exchange Rate" that the exchange rate is currently under significant upward pressure and that this trend could continue for quite some time.

According to the report, the KRW-USD exchange rate gradually increased from the mid-2010s and moved within the 1,200–1,300 won range until the first half of 2024. After temporarily falling to the 1,300 won range in the second half of 2024, it has since remained in the 1,400–1,500 won range.

Based on an observation of exchange rate trends from January 2015 to April of this year, Park analyzed that there were three structural breaks—April 2019, April 2022, and March 2024—which led to an increase in the average level of the exchange rate.

Park diagnosed that "the upward shift in the average level of the KRW-USD exchange rate appears to be related to the global strength of the U.S. dollar and the expansion of overseas securities investment by domestic investors."

He added, "Unless there are additional shocks in the future, it is highly likely that the average level of the KRW-USD exchange rate will not quickly return to past levels and will instead remain near its current range." He also noted, "Domestic financial institutions need to closely monitor the impact of the continued high exchange rate on profitability and capital adequacy."

This content was produced with the assistance of AI translation services.