Korean won's nominal effective exchange rate hits two-year peak

Data from the Bank for International Settlements indicate the Korean won's nominal effective exchange rate rose to 94.83, the highest reading in roughly two years and the strongest since October 2024 when it was 94.91. The NEER, which measures the won against key trading partners without accounting for inflation, increased from 91.99 the previous month after a decline to the mid-80s earlier in the year. This rebound coincides with a firming of the won against the U.S. dollar, where the exchange rate averaged 1,358.8 won per dollar in September and 1,337.2 won in the first 23 days of October, marking the best monthly level since September 2024.

The real effective exchange rate also rose to 92.73 in September, its highest since November 2024. Bank of Korea Governor Shin Hyun-song noted the won remains undervalued, while analysts expect the rate to stay near 1,300 won per dollar.