With the won-dollar exchange rate swinging again in recent sessions, foreign exchange experts say the so-called "Goldilocks rate" that would stabilize both South Korea's growth and inflation sits in the low 1,300-won range per dollar. At current levels, they said, the benefits of a stronger won — lower import prices and higher real household income — outweigh the risks it poses to corporate exports and earnings.
In an urgent survey of 20 foreign exchange experts conducted by The Seoul Economic Daily on the 20th, following consecutive rate increases in the United States and Japan, seven respondents picked 1,300 to 1,350 won per dollar as the appropriate level, the largest group. Four chose 1,350 to 1,400 won. That means 11 of the 20, more than half, put the appropriate rate somewhere in the 1,300-won range. The won-dollar rate closed daytime trading on the 18th at 1,383.3 won per dollar, edging close to the 1,400 mark. Four experts named 1,400 to 1,450 won, followed by 1,250 to 1,300 won with three and 1,200 to 1,250 won with one.
Assessments of how a stronger won affects the economy were also mostly favorable. Of the 20 respondents, 14, or 70%, said won strength is positive for the domestic economy. Only one called it negative, while the remaining five described it as neutral.
Kang Hyun-joo, a senior research fellow at the Korea Capital Market Institute, said appreciation of the won eases upward pressure on import prices and boosts households' real purchasing power at a time when global oil prices are high. Respondents also cautioned that if the won strengthens too quickly, exporters could face greater strain on price competitiveness and heavier currency-hedging burdens.
On the Bank of Korea Monetary Policy Board's rate decision in October, meanwhile, expectations for a hold prevailed. Fifteen of the 20 respondents, or 75%, projected the base rate would be left unchanged, while four forecast an increase.
