원달러 환율 1300원대 진입, 연준 금리동결 기대 배경

On the 19th, the won-dollar exchange rate in the Seoul foreign exchange market slid to 1,399 won around midday, falling below the 1,400 won line for the first time in ten months, since it last touched 1,399.5 won on October 2 of last year. The rate closed the day down 14.10 won from the previous session at 1,397.70 won. Markets breathed a collective sigh of relief at the news that the won-dollar exchange rate had returned to the 1,300 range, but a closer look suggests the picture is not nearly as reassuring as it appears. Even at ten-month lows, the rate remains in the high 1,390s, a level that still counts as elevated, and the retreat owed almost entirely to an external factor, namely expectations that the U.S. Federal Reserve would pause its rate hikes, while none of the domestic risk factors that have been eroding the won’s value have actually been resolved.

The immediate trigger for the decline came from the American side. Recently released U.S. retail sales, consumer price index, and producer price index readings all came in below market expectations, bolstering the view that the Federal Reserve will refrain from raising rates again in September. Adding to the dollar’s weakness, the U.S. Treasury Department decided to expand its long-term bond buyback program for the September-to-November period from a cap of two billion dollars to at least four billion dollars, a move markets read as a signal that Washington would no longer tolerate runaway long-term rates. Such a convergence of favorable external variables has been rare this year. Domestic factors played a supporting role as well. Dollar-selling by export firms, led by Samsung Electronics and SK Hynix in the semiconductor sector, has been flowing into the market steadily throughout the month rather than concentrated at month’s end as in the past, tilting the supply-demand balance. Heightened vigilance from currency authorities about smoothing operations reportedly deepened the drop as well. Looked at soberly, however, what drove this move was not a signal that Korea’s underlying economic fundamentals have improved, but purely external variables, weak U.S. price data and the Treasury’s debt-management strategy. The won did not rally on its own strength, it simply climbed onto a ledge the dollar happened to vacate. The moment the Fed’s policy stance shifts again, today’s 1,300s could prove to be little more than an illusion, easily reversed.

Markets are calling this decline a shift toward won strength. But the real problem lies elsewhere. Just a few years ago, 1,300 won was treated as a crisis-level threshold. Now, after sliding into the high 1,390s, the market breathes easy simply for scraping back into the 1,300s. That the benchmark itself has slipped this low is evidence of just how much the won’s underlying strength has eroded. Domestic factors stand squarely in the way of a structural rebound in the won-dollar exchange rate. The Lee Jae-myung administration crafted a 728 trillion won budget this year, raising spending by more than eight percent from the previous year, and as a result national debt is projected to surpass 1,400 trillion won for the first time. The debt-to-GDP ratio is set to cross fifty percent, and the managed fiscal balance deficit is expanding to as much as four percent of GDP. As the country’s finances pile up debt at this pace, foreign investors have less reason to trust the won as a long-term store of value. While a single external tailwind bought the currency a brief respite, the fiscal soundness that should be underpinning the won’s value at its foundation is moving in the opposite direction.

The path to genuinely stabilizing the exchange rate is not to keep watching the Federal Reserve and leaning on external variables, but to rebuild the domestic foundation of trust in the won. The first step needed is to legislate a fiscal rule, setting clear ceilings on the national debt ratio and the managed fiscal deficit so they hold regardless of the political calendar. The People Power Party should use the regular parliamentary budget review to scrutinize every line item of the 728 trillion won super-budget, separating necessary spending from spending designed merely for show. Just as President Syngman Rhee built the framework of a free-market economy and President Park Chung-hee laid the foundation of a self-reliant economy through export-led growth, what is needed now is not flashy spending expansion but disciplined, principled fiscal management. Alongside that, a mid- to long-term strategy to diversify export industries is needed to move away from a fragile structure in which currency defense depends on dollar-selling from a single sector, semiconductors. The more favorable the external environment looks, the more urgent it is to strengthen the domestic fundamentals, because a single hawkish signal from the Fed could just as easily push the won back toward 1,400 or even 1,500.

In the end, the won-dollar exchange rate’s return to the 1,300s is welcome news, but it is not grounds for reassurance. The force behind the decline came from the United States, not from Korea, and the domestic fiscal soundness that should determine the won’s real value keeps deteriorating under a 728 trillion won super-budget and national debt approaching 1,400 trillion won. This is not the moment to congratulate ourselves over a rebound driven by external variables, it is the moment to rein in the expansionary fiscal stance. At the root of it all lies the Lee Jae-myung administration’s reckless fiscal expansion, weighing down the won, and the only real remedy is a change of government.