South Korean Won losing ground against the US dollar

As reported in Asia Times

15th May 2019 - The South Korean won continued its poor run as it recorded an annual low of 1,190 won to the dollar on Tuesday. Despite the intervention by the Bank of Korea last week, there seems to be no way out.

As per tradition, the Bank of Korea intervened to weaken the won, in order to promote exports. However, there appears to be little to no effect. The won is weakening due to external effects. In a highly trade-dependent country like Korea, external effects can have far reaching consequences.

The strengthening of dollar as a result of heightened risk averse sentiment in the midst of a trade dispute between the US and Korea's top trade partner China, is the primary reason for the weakening of the won. Korea's negative GDP growth in the first quarter is only adding fuel to the fire. The won experienced a six percent fall against the dollar in the last six months. The intensifying trade war is only expected to worsen the conditions.

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