If Trump comes, he'll have a seizure of the won."The exchange rate could fluctuate by 1,400 won." [Y Record]

■ Host: Anchor Lee Jung-seop, Anchor Cho Ye-jin
■ Starring: Seok Byung-hoon, Professor of Economics at Ewha Womans University

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information. Please specify [YTN News START] when quoting.

◇Anchor> The results of the presidential election will have a great impact on the world. Whoever becomes Trump or Harris, it will have a huge impact on Korea, especially on the economy, but there is a possibility that the exchange rate and this will fluctuate a lot, right?

◆ Seok Byung-hoon> That's right. Currently, the won-dollar exchange rate is close to 1,400 won. But what the market predicts now is that if Harris is elected, the won-dollar exchange rate will be lower than now, so the dollar will weaken. If Trump is elected, the strong dollar will continue. Therefore, we cannot rule out the possibility that the won-dollar exchange rate in Korea will exceed 1,400 won. The biggest reason is that the two candidates have pledged various tax cuts. This is because if candidate Trump is elected, the fiscal deficit is expected to increase further due to the tax cut policy.

According to estimates by a group called CRFB, Harris's pledge is expected to increase the U.S. fiscal deficit by $3.5 trillion over the next decade starting in 2025, while Trump's pledge is now expected to double by $7.5 trillion. In that case, we have to eventually make up for this deficit by issuing government bonds. If the amount of government bond issuance increases, the price of government bonds falls, and the interest rate on government bonds rises. If U.S. government bond rates rise, investment funds will flock to the U.S., so the dollar is expected to strengthen, and the won-dollar exchange rate is likely to rise further due to large-scale government bond issuance when Trump is elected.

◇ Anchor> And even if Trump loses after a close race, he can disobey the presidential election. In this case, there may be continuous volatility, right?

◆ Seok Byung-hoon> That's also the aspect that many investment banks are concerned about now. Because in the last presidential election, Trump supporters disobeyed the results and stormed into Congress. So, if the election is running so fast again this time, the results of the presidential election came out, and if it's too close, Trump supporters will object to it, and the uncertainty will increase, and in this case, the risk of increased volatility in the exchange rate cannot be ruled out.



Excerpted from the conversation: Lee Sun Digital News Team Editor

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