[Edaily Reporter PARK JONG-HWA ] With the exchange rate stabilizing recently, the won’s standing is also rising. However, how long this stable exchange rate will last appears to depend on the monetary policy decisions made by the U.S. Federal Reserve (Fed).

According to the Seoul Foreign Exchange Brokerage on the 16th, the one-month won-dollar contract traded overnight on the New York Non-Deliverable Forward (NDF) market closed at 1,340.2 won. Compared to last June, when the won-dollar exchange rate soared to 1,561 won, the rate has fallen by more than 200 won in just four months. This is due to continued inflows of foreign currency as exports—led by semiconductors—hit record highs, coupled with expectations that the Fed will ease its tightening stance.

Han Sang-chun, a research advisory committee member at the Hana Financial Research Institute, analyzed in a recent report that, among global currencies, the won has depreciated against the dollar at the fastest rate. He stated, “The current won-dollar exchange rate is in the 1,350 won range, which is the appropriate level estimated based on the real effective exchange rate,” adding, “It needs to fall further to stabilize import prices, alleviate the burden of additional interest rate hikes, attract foreign capital, and secure funds for investment in the U.S. “It seems advisable to let the market determine the exchange rate until it falls below 1,250 won, a level at which adverse effects on semiconductor exports and other sectors are a concern,” he said.

The won’s standing in global markets has also changed. With U.S. Treasury yields surging recently, won-denominated bonds are gaining popularity in Southeast Asia and elsewhere as an alternative to dollar-denominated bonds. Vingroup, Vietnam’s largest private company, plans to issue Arirang Bonds worth 300 to 400 billion won in partnership with Shinhan Investment Securities and others.

It remains unclear how long the trend toward exchange rate stability will last. The Federal Reserve’s interest rate policy is cited as the biggest variable. In a report, one committee member noted, “Current inflation levels are all above the 2% target, so if we follow the views of the anti-Trump faction and Chair Wash, interest rates should be raised,” adding “Even though interest rates were raised for the first time in three years at the September FOMC (Federal Open Market Committee) meeting, we will have to wait and see whether further rate hikes will once again weaken the won’s value and standing.”