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The exchange rate between the South Korean Won (KRW) and the Japanese Yen (JPY) is a critical indicator of the economic relationship between South Korea and Japan. Over the past few months, this exchange rate has experienced notable fluctuations, reflecting various economic factors and market sentiments. This report provides an analysis of the KRW/JPY exchange rate trends, key influencing factors, and potential future outlooks.

Recent Exchange Rate Trends

Between December 2024 and March 2025, the KRW/JPY exchange rate exhibited a downward trend. On December 19, 2024, the rate peaked at 0.1092 JPY per KRW. However, by March 6, 2025, it had declined to 0.1022 JPY per KRW, marking a decrease of approximately 6.4% over this period. The average exchange rate during these months was 0.1063 JPY per KRW.

This depreciation indicates that the South Korean Won weakened against the Japanese Yen during this timeframe. Such movements can be attributed to a combination of domestic economic conditions, monetary policies, and external market factors affecting both countries.

Factors Influencing the Exchange Rate

Several key factors have influenced the KRW/JPY exchange rate in recent months:

1. Economic Indicators: Differences in economic performance between South Korea and Japan, such as GDP growth rates, inflation levels, and trade balances, can impact currency valuations. For instance, if Japan's economy outperforms South Korea's, the Yen may strengthen relative to the Won.

2. Monetary Policies: Decisions by the Bank of Korea and the Bank of Japan regarding interest rates and monetary easing or tightening directly affect currency values. Divergent monetary policies can lead to capital flows that influence the exchange rate.

3. Global Market Sentiment: Investor risk appetite and global economic conditions play a role in currency movements. In times of global uncertainty, the Japanese Yen often serves as a safe-haven currency, leading to its appreciation against other currencies, including the Won.

4. Trade Relations: Bilateral trade dynamics between South Korea and Japan, including trade surpluses or deficits, can affect demand for each country's currency, thereby influencing the exchange rate.

Historical Context

Looking at a broader timeframe, the KRW/JPY exchange rate has seen significant variations. In 2024, the highest rate was 0.1168 JPY per KRW on July 1, while the lowest was 0.1052 JPY per KRW on December 6. The average rate for the year was 0.1111 JPY per KRW.

These fluctuations underscore the sensitivity of the exchange rate to both domestic economic developments and international market conditions.

Future Outlook

Forecasts suggest a continued bearish trend for the KRW/JPY exchange rate in the near future. Analysts predict a decrease of approximately 3.38% over the next month, with the rate potentially reaching 0.100015 JPY per KRW. This outlook is based on current market sentiment and technical indicators, including a 14-day Relative Strength Index (RSI) of 33.87, indicating bearish conditions.

It's important to note that exchange rate forecasts are subject to change due to unforeseen economic events, policy decisions, and shifts in global market sentiment.

Conclusion

The KRW/JPY exchange rate has experienced a downward trend over the past few months, influenced by a complex interplay of economic indicators, monetary policies, and global market dynamics. While current forecasts suggest a continuation of this trend, stakeholders should remain vigilant and consider a range of factors when making decisions related to this currency pair.