The value of major Asian currencies, including the Korean won, has fallen to its lowest levels in over two years against the dollar amid Donald Trump's reelection, China’s economic slowdown, and political instability in South Korea. These factors have caused the won’s value to plummet faster than any other major Asian currency.

■ Bloomberg Asia Dollar Index Hits 2-Year Low
On December 17, Bloomberg reported that its Asia Dollar Index—measuring the dollar's strength against nine major Asian currencies—dipped to 89.9091, its lowest since November 2022 during the “King Dollar” era.

The index heavily weights the Chinese yuan (46.09%) and Korean won (12.41%), reflecting their significant contributions. Other currencies included in the index are from Singapore, India, Taiwan, Thailand, Malaysia, Indonesia, and the Philippines.

The won’s value has fallen over 10% against the dollar this year, the steepest drop among currencies in the index. The exchange rate exceeded 1,444 KRW/USD in offshore markets on December 3, marking its highest level since October 2022, and is currently trading at around 1,437.7 KRW/USD.

Compared to September's 1,330 KRW/USD, the rate has surged by over 100 KRW in just three months.

■ Expectations of Continued Depreciation
The won closed at 1,438.9 KRW/USD in the Seoul foreign exchange market on December 17, up 3.9 KRW from the previous day. This represents an 11.7% increase compared to the year-end exchange rate of 1,288.0 KRW/USD in 2022.

Trump’s campaign pledges, including tax cuts and tariffs, are expected to sustain the strong dollar trend, further pressuring the export-reliant South Korean economy and its currency. Many experts predict the exchange rate could rise above 1,450 KRW/USD by mid-2024.

■ Financial Impact on Korean Communities in the U.S.
The “King Dollar” phenomenon is causing financial stress for Korean students and expats in the U.S., as converting won to dollars has become significantly more expensive.

For those sending money from Korea to the U.S., the higher exchange rate increases the financial burden. Korean expatriates receiving salaries in won are seeing their incomes diminish in dollar terms. Similarly, students are cutting back on expenses as their living allowances shrink, while their families in Korea face greater economic strain to send money.

On the other hand, the strong dollar benefits U.S.-based Korean travelers visiting Korea. Travel agencies expect increased spending by Korean Americans, who can enjoy lower costs when converting dollars to won or using U.S. credit cards in Korea.

■ China and Other Regional Currencies
The Chinese yuan also reached a new high of 7.2972 CNY/USD on December 3 and is trading at around 7.28 CNY/USD, its highest level since November 2022.

Speculation is growing that China may cut its benchmark interest rate further to stimulate its economy. Analysts suggest that if Trump implements his tariff policies, China may respond by allowing further yuan depreciation to counteract the economic impact.

Of the currencies in Bloomberg’s Asia Dollar Index, only Malaysia’s ringgit has appreciated against the dollar this year, rising about 3% due to improved growth projections for the country.

By Hwangdong Cho

<Hwandong Cho>