Seoul: The South Korean currency fell markedly past the 1,500-won level against the U.S. dollar Thursday as global oil prices surged amid intensifying tensions in the Middle East. The won opened at 1,505 per dollar, down 21.9 won from the previous session, breaching the psychologically and technically critical 1,500-won threshold.
According to Yonhap News Agency, on Monday, the won touched the level for the first time since March 2009 in intraday trading amid surging global oil prices, the Middle East crisis, and concerns about supply disruptions. The weakness of the currency was exacerbated as global oil prices rose more than 5 percent on Wednesday (U.S. time), following Israel's attack on natural gas facilities linked to Iran's South Pars field, the world's largest gas field.
In a retaliatory move, Iran's Revolutionary Guard threatened to target oil and gas facilities in Qatar, Saudi Arabia, and the United Arab Emirates, further increasing the risk of disruptions to energy supplies, as reported by foreign media. Adding to the pressure on the won, Federal Reserve Chair Jerome Powell made hawkish remarks regarding the situation in Iran, which contributed to market anxieties.
During a press conference held after the decision to maintain the benchmark interest rate on Wednesday (U.S. time), Powell noted that the surge in oil prices has heightened inflationary pressures, indicating a cautious approach to the timing of future rate cuts. The Fed opted to keep the rate unchanged at the 3.5-3.75 percent range for the second time in a row, while still projecting a single rate cut within the year.
The U.S. Dollar Index, which evaluates the dollar against a set of six major currencies, rose significantly above the 100 level. South Korea's foreign exchange and stock markets have experienced increased volatility since the beginning of this month, following the U.S.-Israeli attacks on Iran.