ANN/THE KOREA HERALD – The South Korean won plummeted in value in December 2024, experiencing one of the steepest depreciations globally, according to data released yesterday.
The Bank for International Settlements reported that the currency’s real effective exchange rate plunged to 91.3 at the end of December, a significant 1.99-point drop from the previous month.
REER measures the strength of a currency relative to a basket of other currencies, adjusted for inflation.
A reading below 100 indicates depreciation compared to the base year, while a reading below the benchmark means the opposite.
Among the BIS-listed 64 countries, South Korea’s December REER was the second-lowest point, trailing only Japan’s 71.3.
The monthly decline of 1.99 points was also the third fastest globally, following Brazil’s 3.94 point drop and Australia’s 2.37-point decline.
This marked South Korea’s largest monthly REER loss in over two years, since a 2.92-point plunge in September 2022 during the Legoland debt default crisis that triggered a corporate bond yield spike and credit crunch concerns.
The won, which hovered around KRW1,370 won per United States (US) dollar in November, plummeted to 1,442 won on December 3.
The currency further weakened to KRW1,486.7 by December 27.
“Political changes sparked by the martial law imposition have greatly affected the foreign exchange market,” Bank of Korea Governor Rhee Chang-yong said at a January press conference. “The won-dollar exchange rate is higher than what we can expect based on our economic fundamentals and the rate gap with the US.”
