Another national currency collapse!

In the first half of this year, the continuous decline of the yen has attracted widespread attention from the international community, and now, the won seems to be accelerating its pace.

Quotes from the foreign exchange market in Seoul, South Korea, showed that the won/dollar exchange rate fell to 1,338.5 won per dollar on Monday, the lowest level since April 29, 2009.

Although a week ago, the South Korean finance minister said that the depreciation of the won is in line with the trend of other currencies, and there is no need to worry too much about the weakness of the won, but the current depreciation of the won has not stopped, which still worries many traders who invest in the South Korean market.

On the 25th, a monetary policy direction meeting was held in Seoul, and it was decided to raise the benchmark interest rate by 25 basis points from 2.25% to 2.5%.

This is the fourth time this year that the Bank of Korea raised the benchmark interest rate after raising the benchmark interest rate by 25 basis points in April and May this year and by 50 basis points in July. This is also the first time in the history of the Bank of Korea that the benchmark interest rate has been raised four times in a row.

The Bank of Korea raised the benchmark interest rate this time mainly because prices in South Korea remained high. The consumer price index (CPI) rose 6.0% year-on-year in June and 6.3% year-on-year in July, the highest increase in nearly 24 years.

Statistics Korea released the report "Regional Economic Trends in the Second Quarter of 2022", stating that South Korea's consumer price index in the second quarter was 107.54 (100 in 2020), a year-on-year increase of 5.4%, the highest in 24 years since 1998 (8.2%). highest value.

The Bank of Korea therefore raised its 2022 full-year CPI growth forecast from 4.5% to 5.2%, and lowered its 2022 full-year economic growth forecast from 2.7% to 2.6%.

In addition, the Federal Reserve raised the benchmark interest rate sharply twice in a row, which put the Korean won under pressure. It once reached a 13-year low of 1,345.5 won per US dollar, which further prompted the Bank of Korea to raise the benchmark interest rate.

After entering this month, the Korean food and chain restaurant industry has raised product prices. South Korea's Nongshim raised the price of instant noodles again after a year, and the price of relatively cheap food burgers also rose.

In terms of price increases of Nongshim's main products, Xin ramen increased by 10.9%, Xiao Raccoon instant noodles increased by 9.9%, and shrimp sticks increased by 6.7%. In large supermarkets, the average price of Shin ramen per pack has risen from 736 won to 820 won, and the price of shrimp sticks has risen from 1,100 won to 1,180 won per pack.

In addition to processed food, Korean restaurant chains have also raised prices. Prices of 68 food items in South Korea have been raised by an average of 4.8% from the 25th.

The NoBrand Burger, which has always been known for its high value for money, also raised the price of 40 food items by an average of 5.5% since last week after eight months. In addition, major restaurant chains such as Burger King and Lotte Leah have recently raised prices again.

In addition to rising food prices in South Korea, the "Korean National News" reported that the market believes that due to the impact of South Korea's import and export situation, the Korean won is likely to depreciate further in the future. Data released by the Korea Customs Service showed that from August 1 to 20, South Korea's total exports increased by 3.9% year-on-year, but the average daily export value increased by only 0.5% year-on-year.

Earlier in July, South Korea's total exports increased by 9.4% year-on-year. The trade balance has a deficit of US.217 billion and is likely to have a deficit for 5 consecutive months.