What is an exchange rate? What USD/KRW at 1,400 means

STEP 1The exchange rate is the dollar's price tag

Once you see the exchange rate as a "price" rather than a "number," most of the confusion disappears. First, decide what it is the price of.

What does USD/KRW 1,400 mean?

The exchange rate is the ratio at which two countries' currencies are swapped. In Korean news, "the exchange rate" on its own usually means USD/KRW. "USD/KRW 1,400" means you need KRW 1,400 to buy 1 dollar. In other words, the exchange rate is the won price tag on a product called the dollar.

Seen this way, the principle you learned in Lesson 3 applies directly. When more people want to buy dollars, the price of the dollar, that is, the exchange rate, rises; when more people want to sell dollars, the rate falls. We look at who buys and sells dollars, and why, in the next lesson.

It also helps to know the notation. In the foreign exchange market, the same rate is sometimes written "USD/KRW 1,400." It shows how many units of the second currency (won) one unit of the first currency (dollar) is worth. The order is the opposite of the Korean "won-dollar" notation, so it is easy to mix up, but both mean the same thing: "1 dollar = how many won."

Four ways to say the same thing

Exchange-rate news is hard to follow because the same phenomenon is described with several different words. Everything in the same row of the table below means the same thing.

There is one trick to remember: the exchange rate is the price of the dollar. When the price rises, the item (the dollar) has become scarcer, and the strength of the money used to buy it (the won) has become relatively weaker.

There are exchange rates for currencies other than the dollar too

There are exchange rates between every pair of currencies. The won/yen rate is usually quoted as "won per 100 yen," and the won/euro rate as "won per 1 euro." The yen is quoted in bundles of 100 because one unit is worth so little. At KRW 900 per 100 yen, a JPY 10,000 hotel night in Japan costs KRW 90,000.

Even so, the most important rate in investing news is USD/KRW. Most of Korea's import and export payments are made in dollars, commodity prices such as crude oil are quoted in dollars, and foreign investors' returns are usually calculated in dollars. That is why this lesson and the next one focus on USD/KRW. For reference, a won rate against another currency is usually set by multiplying "that currency's dollar rate" by USD/KRW. So on days when the dollar strengthens worldwide, the yen and the won often weaken together.

KRW 900 per 100 yen is an example number used to show the calculation.

STEP 2How exchange rates reach daily life and companies

Now let's follow whose wallet changes when the price tag changes. You will see it right away if you change just a few numbers.

See it in a picture: the exchange rate scale

Move the slider or press a button. The left plate is 1 dollar, and the right plate is the won you swap for that 1 dollar. The cards below show the change versus the base rate of 1,300.

Press "KRW 1,400." The price of overseas purchases and of crude oil rises 7.7%, increasing the burden on consumers and on companies that import oil. Conversely, a company that sold a car for $30,000 receives KRW 3 million more in won for the very same car. The same exchange-rate change is a cost for some and a gain for others.

Three paths: consumers, exporters, and prices

• Consumers and travelers: A weak won makes overseas travel, study abroad and overseas online shopping more expensive. The purchasing power you learned about in Lesson 7 shrinks abroad.
• Exporters: Revenue earned in dollars becomes larger when converted to won. They also gain room to lower their dollar prices while keeping their won prices. This is why exchange rates matter in a country like Korea with a large share of exports (net exports in Lesson 4). Who gains how much is weighed on a scale in Lesson 25.
• Import prices and consumer prices: Because crude oil, grain and parts are bought in dollars, a weak won raises import prices. Over time this burden spreads to gasoline and food prices and tends to push up the CPI you learned about in Lesson 8. That is why central banks also watch the exchange rate when setting interest rates.

Percentages depend on the base

1. Dollar basisKRW 1,300 → KRW 1,400: (1,400 − 1,300) ÷ 1,300 = dollar price +7.7%
2. Won basisDollar value of KRW 10,000: $7.69 → $7.14 = won value −7.1%
3. SummaryThe same KRW 100 move gives slightly different numbers: "the dollar became 7.7% more expensive" versus "the won became 7.1% cheaper"

Even if the news shows both "won value down 7%" and "exchange rate up 7.7%," both are correct. They differ only in which currency the division is based on. The bigger the move in the exchange rate, the bigger this gap.

STEP 3Reading the 45-year USD/KRW chart

Now let's look at the path the actual exchange rate has taken. Tap the chart to see that month's average rate.

Four spikes

• 1997 Asian financial crisis: The rate, in the mid-KRW 800s at the start of the year, soared to the KRW 1,960s in a single day by year-end (Bank of Korea daily high KRW 1,964.8). On a monthly-average basis, the highest was KRW 1,707 in January 1998. It was the price of the dollar more than doubling as the country ran short of dollars. Afterward, Korea greatly increased its foreign exchange reserves.
• 2008–2009 financial crisis: As the whole world rushed into the safe dollar, the rate reached a monthly average of KRW 1,450 in March 2009 and KRW 1,597 intraday.
• 2022 strong dollar: As the US raised its policy rate rapidly to contain inflation and Korea's trade balance turned to a deficit, the rate hit KRW 1,444.2 intraday on Oct 25.
• June 2026: Foreign selling of Korean stocks, a prolonged Middle East war and stronger-than-expected US jobs data coincided, and on June 5 the Seoul daytime close was KRW 1,539.1, with overnight trading above KRW 1,560. That was the highest level in about 17 years, since March 2009. Afterward the won strengthened quickly on strong semiconductor exports, falling to KRW 1,349.5 intraday on Sep 4.

The four episodes have something in common. The exchange rate usually moves a little at a time, then jumps sharply over a short period when dollars run short or anxiety grows. And once the crisis passed, much of the move was reversed. What drives such moves is broken down in Lesson 24 into rate differentials, the trade balance, and risk-off sentiment.

The 1997 start- and end-of-year figures are based on FRED DEXKOUS daily data (1997-01-06: KRW 845.5; 1997-12-23: KRW 1,960) and Bank of Korea high-point data. The 2009 intraday high is based on The Korea Herald (2026-06-06), 2022 on Yonhap News (2022-10-25), and 2026 on Yonhap News (2026-06-05), The Korea Herald (2026-06-06) and Yonhap News TV (2026-09-04).

For stocks: the same exchange rate, different knobs

You can read the exchange rate through the two knobs from Lesson 1. A weak won mainly turns the earnings knob in different directions by sector. Exporters that sell in dollars see their won profits grow, while companies that buy raw materials in dollars see costs rise. At the same time, if the weak won arrives together with worries about rate hikes or foreign capital outflows, the multiple knob can fall too.

You can see today's USD/KRW level and the direction of the last 3 months under the current phase on the Macro Map, and whether a weak won is generally favorable or unfavorable by sector on the "Weak won" row of the Impact Map.

Not always. Even an exporter gains less from a weak won if it buys many raw materials and parts in dollars or carries a lot of dollar debt. Also, exchange-rate effects reach earnings a few months later, so it is hard to call the direction of a stock price from a single day of exchange-rate news.