The Era of a 1,400-Won Exchange Rate: How to Approach Dollar Investing Now
As the USD/KRW exchange rate continues to hover around the 1,400-won level during trading, there is much debate among investors.
For export companies, a higher exchange rate improves profitability, but it can also lead to higher import prices and weak domestic demand, so opinions are divided when looking at the overall economy.
Investors in U.S. stocks, in particular, are facing a double whammy. Even if stock prices rise, the exchange rate reduces returns when converted into Korean won. Conversely, those preparing for overseas trips or study abroad find it even harder to time their currency exchanges.
Personally, I think the exchange rate could rise further in the short term. The market's expectation that U.S. interest rates won't fall easily remains solid, and domestic political risks are adding to the mix. However, since the exchange rate has already climbed so quickly, I believe splitting your purchases is safer than chasing the rally.
What do you all think about the exchange rate? I'm curious whether you think it's right to increase your dollar asset allocation, or whether it's better to wait for now.
10 answers
Yeah, splitting purchases seems right.
Well, if US interest rates come down, the exchange rate could drop sharply, but aren't you being too confident? Political risk will be resolved soon too.
I exchanged dollars last year when the rate was 1,300, and now I'm taking a massive hit... T_T I really don't get exchange rates. At this point, it seems like there's no choice but to buy in installments.
This is correct lol
Since even experts disagree, diversification is the answer for individuals. I keep 30% in dollars.
People say the short-term rise in FX is due to US rates and political risk, but hasn't that already been priced in? Getting in now could just be a reverse money game.
Great for export companies, but domestic demand is dead. An exchange rate of 1400 is a real double-edged sword.
As an international student, every time I exchange money, I get a reality check... I should've just bought dollars in advance.
I'll keep watching a bit more.
Dollar investment ultimately depends on your own position. If you already hold a lot of US stocks, you should consider currency hedging; if you have a large cash allocation, I think it's better to diversify exchange rate risk through dollar-cost averaging. For short-term trading, volatility is too high right now.