[Nonhyeon Square — Kim Dae-jong’s Economic Diagnosis] Only by Building Growth Engines Can We Tame the “High Exchange Rate” (2026-01-29)

An era of a high (高) won-dollar exchange rate, climbing to the upper 1,400s, is becoming a reality. On the 28th, news broke that the U.S. would tolerate a ‘weak dollar,’ triggering a sharp decline that brought the rate down to the 1,420 range, but the overall high exchange rate has continued.

Anxiety is also spreading among the public that “isn’t a second foreign-exchange crisis coming?” The exchange rate is not merely a number in the foreign exchange market — it is an indicator of a country's economic strength and credibility. At the same time, a high exchange rate forces a fundamental reexamination of individual assets and the structure of the national economy.

The survival strategy for individuals in a high-exchange-rate era is clear: global asset diversification centered on U.S. stocks, gold, and dollar assets. Global stock market capitalization weightings show the United States accounting for about 60%, while Korea is only around 1.5%. This figure clearly shows where the flow of global capital is concentrated.

Individual investors, too, need to look at the structure during a high-exchange-rate era and diversify their assets to approximate the global market-capitalization weighting. As the exchange rate rises, the value of dollar-denominated assets naturally becomes a hedge.

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The reality is moving in the opposite direction. As of 2025, foreign direct investment (FDI) outflows are nearly twice as large as inflows, and domestic companies are likewise relocating their production bases to the United States, Vietnam, India and elsewhere. The biggest reasons are taxes and regulation.

The U.S. corporate tax rate is 21%, while Korea's is 26%, putting it at a competitive disadvantage. Singapore, a competing country, has a corporate tax rate of 17%; the only stock-related tax is the securities transaction tax, with no dividend tax, capital gains tax, or inheritance tax at all. For this reason, 80% of Asia's financial headquarters are located in Singapore.

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Korea declared its intention to build an Asian financial hub, but it relocated the National Pension Service to Jeonju, the Teachers’ Pension Service to Naju, the Government Employees Pension Service to Jeju Island, the stock exchange to Busan, the Korea Credit Guarantee Fund to Daegu, and so on.

If foreigners come to Korea for investment consultations, they have to travel around the entire country. Financial institutions need to be consolidated in one place to build competitiveness. That is why New York, Singapore, and London are competitive.

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For Korea to survive, it must lower the corporate tax rate to the global average of 21% and swiftly permit new industries. The exchange rate is a result, not a cause.

The more companies leave, jobs disappear, and growth engines weaken, the more the exchange rate is bound to rise. The government and the National Assembly must join hands to build a business environment on par with the global average. Only a country where young people work and companies invest can overcome the era of a high exchange rate.

https://m.etoday.co.kr/news/view/2550526#_enliple