Won-dollar rate at highest since 2008 global financial crisis; families of overseas students bear the brunt as remittance costs surge; bank branches flooded with inquiries on when to exchange; expats drawing on Korean credit lines face double burden; summer travelers scramble to cover rising trip costs

The won-dollar exchange rate is displayed at a currency exchange booth in Myeong-dong, Seoul, on Monday, as the rate hit its highest level in 17 years and three months amid expectations of further US interest rate hikes and rising geopolitical risk in the Middle East. [Herald DB]
The won-dollar exchange rate is displayed at a currency exchange booth in Myeong-dong, Seoul, on Monday, as the rate hit its highest level in 17 years and three months amid expectations of further US interest rate hikes and rising geopolitical risk in the Middle East. [Herald DB]

"Every morning I wake up and the dollar has climbed again. It's so frustrating that the rate has to be this high at exactly the moment I need to send money abroad."

The won-dollar exchange rate has surged to its highest level since the global financial crisis, delivering a direct blow to ordinary households. Families supporting children studying overseas and Korean expatriates living abroad are feeling the strain particularly acutely. Workers planning summer vacations outside Korea are also finding it increasingly difficult to cover their travel costs.

Kim, a worker in his early 50s, sends roughly 5,000 Canadian dollars a month to his child studying in Canada. He wired a large sum again earlier this month and says he now sighs at the "enormous losses" every time he makes a transfer. The sharp fall in the won's value means he is effectively sending far more money than he was a year ago.

"Sometimes I think about how much better off I'd have been if I had just invested that money instead," Kim said. "My wife is living in Canada with our child, and the cost of living there has become such a burden that they're planning to come back to Korea this summer."

Frustration is spilling over into online communities for overseas students. One student in the United States wrote on a forum that he feels guilty asking his parents for money and worries that students starting university this year and their families will have it even harder. Another family of a student abroad said they check the dollar rate every day hoping it will fall, only to watch it rise each time.

Bank branches in Seoul's Gangnam district — home to a concentration of hagwon and study-abroad agencies — are being flooded with inquiries about when to exchange money or send remittances. "Quite a few customers are asking when the best time to send money to their children abroad would be," a commercial bank official said. "It is difficult to give a clear answer because the direction of the exchange rate is so hard to predict."

Expatriates are not faring much better. Short-term assignees in particular often lack sufficient credit card limits or face complicated local borrowing procedures, leaving many to draw funds from Korea. On top of already high local living costs, the exchange rate burden has created a double hardship.

Han, a worker in his 40s posted to the United States, said grocery and other daily expenses have risen while his salary has stayed the same, leaving him short on living costs. "These days I've been drawing on a minus-통장 — a revolving credit line — I kept in Korea, but with the exchange rate up and interest rates rising too, it's killing me," he said.

Workers planning overseas trips for the summer holiday season are also under pressure. Airfares have already spiked well above normal levels in the wake of the Middle East war, and the rising exchange rate has made budgeting for travel even more stressful.

Kim, a worker in his 30s planning a trip to Mexico in mid-June, said he is agonizing over expenses. "I've already booked my flight and can't cancel, so the financial pressure is real," he said. "Just the accommodation costs have gone up by about 250,000 won ($180) compared with what I originally budgeted, and I'm still trying to figure out when to exchange the rest of my travel money."

Hong, another worker in his 30s currently traveling in Australia, said he had expected the rate to stabilize when he paid for his flights in April, but it has only climbed further. "I'm staying at a hotel where I pay on arrival, and I'm ending up paying about 15 percent more than when I made the reservation," he said. "That difference alone would have been enough to book a much nicer place."

The won-dollar rate opened Wednesday at 1,525.0 won, up 12.9 won. That is down somewhat from the intraday peak of 1,549.25 won reached at 10:28 a.m. on Friday, when the rate threatened to breach the 1,550-won level, but analysts say the high-rate risk has not been resolved.

With the won showing little sign of stabilizing, currency authorities are stepping up their response. The Ministry of Economy and Finance, the Bank of Korea and financial regulators plan to conduct a joint inspection of major foreign exchange banks to check for market-distorting activity. The government views certain speculative foreign exchange transactions — including non-deliverable forward trades — as one of the factors amplifying recent volatility. The Bank of Korea has officially signaled a benchmark interest rate hike in the second half of this year. Analysts expect the foreign exchange market to stabilize once rates are adjusted.

한은 “투기적 거래가 환율 변동성 증대”…美 금리인상땐 1600원 가능성도 [증시 ‘검은 월요일’]

한은 “투기적 거래가 환율 변동성 증대”…美 금리인상땐 1600원 가능성도 [증시 ‘검은 월요일’]

원/달러 환율이 심리적 마지노선인 1550원선마저 넘어서면서 금융권 전반에 긴장감이 커지고 있다. 외국인 투자자의 대규모 주식 매도가 원화 약세를 부추기는 가운데 중동
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