History of the Won–Dollar Rate — The Number That Spiked in Every Crisis
The won–dollar rate of '1,500 won' is a number of dread in Korea's economy. It has crossed this line only twice, in 1997 and 2008. Let us retrace, with numbers, what happened then.
1997 IMF crisis: cut in half within a month
In 1997, Korea suffered the worst foreign-exchange crisis since its founding.
Just before the crisis, in early November of that year, the won–dollar rate was only in the high 800-won range. But after foreign reserves ran dry and Korea applied for an IMF bailout, the rate surged uncontrollably.
In December 1997, the won–dollar rate momentarily spiked to the 1,960–1,990 won range. In little more than a month, the value of the won was effectively halved.
That the exchange rate jumped twofold means that debt to be repaid in dollars doubled in won terms. Countless companies could not withstand this exchange loss and collapsed.
Source: Namuwiki '1997 Foreign Exchange Crisis/Timeline,' KDI Economic Education 'IMF Foreign Exchange Crisis.' The December momentary peak is recorded between 1,960 and 1,995 won depending on the source.
2008 global financial crisis: crossing 1,500 won again
Eleven years later, a U.S.-originated global financial crisis engulfed the world.
From the second half of 2008, the won–dollar rate began surging again, reaching the 1,570–1,590 won range intraday in March 2009. It was the first time since the IMF crisis that it crossed the 1,500-won line again.
One reason the won plunged at this time is, as we saw earlier, that the won is not a 'safe-haven currency.' When the world becomes anxious, foreign funds leave Korea, and the won weakens by that much.
The decisive turning point that calmed the exchange rate was the $30 billion currency swap between the Bank of Korea and the U.S. Federal Reserve in October that year. On the day of the announcement, the rate plunged 177 won in a single day and the fear subsided.
Source: Ledesk '1997·2008 Worst High-FX Periods,' Yuilbo 'The 1,400-Won Trauma.' Both crises are cross-confirmed as crossing 1,500 won.
The exchange rate is a Korean investor's 'hidden profit and loss'
The lesson this history gives investors is clear. When you invest in overseas assets from Korea, not just the asset price but the 'exchange rate'—another variable—drives your profit and loss.
For example, even if a U.S. stock is unchanged, if the won–dollar rate rises from 1,000 won to 1,300 won (won weakness), the won-converted valuation increases by 30%. Conversely, if the rate falls, the won-denominated return can be shaved even if the stock price rises.
Interestingly, in a crisis this exchange-rate effect can also act as a 'buffer.' If, as in 2008, U.S. stocks crash while the won simultaneously weakens sharply, the won-denominated loss can be smaller than the dollar-denominated one.
That is why 'The Return of Almost Everything' shows the exchange-rate effect separately when displaying the return of overseas assets. The exchange rate is a hidden profit and loss that must not be concealed.
This article organizes past data as educational material and does not predict future exchange rates or recommend any particular currency or asset.
常见问题
Q. Is a rising won–dollar rate always a bad thing?
It depends on who you are. When the won weakens (the rate rises), import prices rise, which is a burden for consumers, but it can be favorable for exporters or those holding dollar assets. For someone invested in overseas stocks, there is an effect of increasing the won-converted valuation. The simple formula 'rate rise = bad' does not hold.
Q. What was the all-time high exchange rate?
The won–dollar rate momentarily spiking to about the 1,960–1,990 won range during the December 1997 foreign-exchange crisis is recorded as the historical peak. During the 2008–2009 financial crisis, it rose intraday to the 1,570–1,590 won range. These two periods are the representative stretches when the won was weakest.
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📋 结果基于历史数据计算,过去的收益不代表未来的收益。
📋 本服务旨在帮助理解投资、供教育之用,并非投资建议。