"Is this right? 1,603 won?" Park, an office worker who visited a currency exchange counter at Incheon International Airport, stopped in front of the rate board.
On Thursday, the won-dollar exchange rate surged to as high as 1,545.30 won intraday, marking its highest level in 17 years and 3 months since March 2009. Amid the surge, the dollar cash selling rate at airport bank counters in Incheon broke through the 1,600 won mark.
Airport counter rates exceed market rates due to structural factors. Bank-specific spreads and fees are added, and airport branches, where exchange demand concentrates just before departure, offer lower preferential rates than downtown branches. That is why counter selling rates exceed 1,600 won even when the market rate is around 1,550 won.
The won-dollar rate has remained in the 1,500-won range for 13 consecutive trading days through Thursday. The main driving force behind the rise is the surge in international oil prices triggered by the stalemate in ceasefire negotiations between the United States and Iran and the expansion of military conflict.
Foreign investors' exit from the domestic stock market is adding further pressure. Net selling has continued for 20 consecutive trading days from June 7 through Thursday, with the cumulative amount surpassing 66 trillion won. Authorities have also stepped in to contain the situation. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said the government would "respond immediately to herd behavior," but the market remained unmoved.
Consumption sites have already changed. Demand for overseas direct purchases, which rely heavily on dollar payments, has rapidly contracted. With shipping cost burdens added to product prices, posts saying "the shipping cost is scarier than the item" are piling up in related online communities. Among Korean students studying in the United States, a mood is spreading of moving up return dates or reconsidering enrollment plans, citing tuition and living cost burdens. This burden is also being passed on entirely to families remaining in Korea.
Kim, a "goose father" who enrolled his son in a university in New York last year, said, "Next year, I'm rather urging him to do his military service first." Considering that annual tuition at a U.S. private university is typically around $50,000, while the exchange rate soared from the 1,300-won range to the mid-1,500-won range recently, the tuition burden in won terms alone has increased by more than 12 million won per year.
With the summer vacation season approaching, the burden of overseas travel expenses has also swelled significantly. Compared to the period when the exchange rate was in the 1,300-won range, the same dollar spending now costs about 15% more in won terms. Because airfare, accommodation, and local card payments are all based on dollars or local currencies, the real increase consumers feel is even greater.
The government maintains that it still has the capacity for foreign exchange authority intervention, but market expectations are low. There are precedents in which exchange rate defense lines collapsed one after another despite repeated verbal interventions.
The consensus in financial markets is that the high exchange rate trend will continue for some time unless external variables—U.S. tariff uncertainty and the prolonged Middle East situation—are resolved.
