A strong dollar that originated from Japan when Bank of Japan governor Haruhiko Kuroda mentioned a negative opinion about the continuation of the weak yen dragged down the won-dollar exchange rate by more than 10 won per U.S. dollar.
On June 10, the won-dollar rate fell by 10.7 won from a day earlier to close at 1,108.2 won. The governor’s remarks pulled down the yen-dollar rate although the won-dollar rate started at 1,120.5 won and edged up in the early stage of the session. The session was closed with the Korean currency at its lowest daily price in response to the yen-dollar movement.
The BOJ governor mentioned his negative opinion about an additional depreciation of the yen at the financial committee meeting of the House of Representatives held that day. The yen appreciated rapidly after the remarks. Specifically, the yen-dollar rate dropped from about 124 yen to approximately 122 yen per U.S. dollar immediately after the remarks, and gained 1.3 percent from the previous session at 3:00pm. In other words, the governor’s analysis that the weak yen is unlikely to continue caused the yen to appreciate the U.S. dollar to depreciate against the yen.
The arbitrated won-yen exchange rate climbed back to over 900 won per 100 yen based on the appreciation of the yen and expectations for a benchmark rate cut. The rate closed at 903.10 won per 100 yen, 2.94 won up from the previous day.
Experts point out that the continuation of a strong yen will be a positive factor for Korean exporters. Until recently, the gap between the values of the Korean and Japanese currencies on a real effective exchange rate basis widened to affect the export competitiveness of Korea.