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The exchange rate between the Chinese Yuan Renminbi (CNY) and the South Korean Won (KRW) has experienced notable fluctuations over the past few months. This report provides an analysis of the CNY/KRW exchange rate trends from late 2024 through early 2025, highlighting key movements and potential influencing factors.

Exchange Rate Trends from Late 2024 to Early 2025

Late 2024 Performance

In 2024, the CNY/KRW exchange rate exhibited a general upward trend. The highest recorded rate for the year was ₩202.57 per ¥1 on December 31, 2024, while the lowest was ₩182.40 on March 11, 2024. The average exchange rate throughout 2024 was approximately ₩189.81 per ¥1. This indicates a strengthening of the Chinese Yuan against the Korean Won over the year.

Early 2025 Movements

Entering 2025, the exchange rate continued to show variability:

• January 2025: The exchange rate fluctuated between a low of ₩196.02 per ¥1 on January 21 and a high of ₩202.84 on January 31, with an average rate of ₩199.33 for the month.

• February 2025: The rate reached its peak for the period at ₩202.87 per ¥1 on February 3. The lowest rate in February was ₩196.98, with an average of ₩198.76.

• March 2025: The exchange rate remained relatively stable, with a low of ₩199.16 per ¥1 and a high of ₩201.76, averaging ₩200.34 for the month.

Factors Influencing the Exchange Rate

Several factors have likely contributed to the observed fluctuations in the CNY/KRW exchange rate:

1. Economic Indicators: Variations in GDP growth, inflation rates, and interest rates between China and South Korea can impact currency valuations. For instance, if China's economy grows at a faster pace than South Korea's, the Yuan may strengthen against the Won.

2. Trade Relations: As both countries are significant trading partners, changes in trade balances, tariffs, or trade agreements can influence the exchange rate. An increase in Chinese exports to South Korea could lead to a higher demand for Yuan, appreciating its value relative to the Won.

3. Monetary Policies: Decisions by the People's Bank of China and the Bank of Korea regarding interest rates and monetary policies can affect investor confidence and currency demand. A higher interest rate in China compared to South Korea might attract investors to the Yuan, strengthening its position against the Won.

4. Global Economic Conditions: External factors such as global economic downturns, geopolitical tensions, or changes in commodity prices can also impact the exchange rate by influencing investor sentiment and capital flows.

Conclusion

The CNY/KRW exchange rate has demonstrated both upward and downward movements over the past few months, reflecting the dynamic nature of international currency markets. While the Chinese Yuan showed a strengthening trend against the South Korean Won in 2024, early 2025 has seen fluctuations influenced by various economic and policy factors. Monitoring these elements is crucial for understanding future exchange rate movements between the two currencies.