Instability in the Middle East is shaking both international financial markets and the real economy. As the won-dollar exchange rate soared past the 1,500 won mark—considered a psychological threshold—and fuel surcharges on airline tickets skyrocketed due to rising international oil prices, overall costs for overseas travel, studying abroad, and business trips are rising sharply.
On the 17th (KST), the won-dollar exchange rate closed at 1,491.90 won, down 1.80 won from the previous day’s closing price in the Seoul foreign exchange market. Although the sharp rise was temporarily calmed by intervention from foreign exchange authorities, a sense of crisis is spreading in the market that the “1,500 won era” has already begun.
On the previous day, the won-dollar exchange rate rose to 1,501 won during trading, surpassing the 1,500 won mark for the first time in 17 years since the global financial crisis in 2009. The recent surge in the exchange rate is attributed to the continued strength of the dollar, driven by rising international oil prices and growing inflation concerns stemming from the escalation of the Iran-U.S. war.
In the foreign exchange market, extreme forecasts suggest the exchange rate could skyrocket to the 1,600 won range if the war becomes prolonged. The problem, however, is that the rise in the exchange rate is not merely a financial market issue. As international oil prices and the exchange rate surge simultaneously due to the Middle East crisis, the aviation industry anticipates a massive increase in fuel surcharges applied to international flights this coming April.
For routes from Korea to the U.S., it is expected that a fuel surcharge of up to approximately 400,000 won will be added for a round trip. Consequently, Korean Air will now charge a fuel surcharge of up to 303,000 won per one-way trip. For a round-trip flight from Incheon to New York, approximately 408,000 won will be added to the ticket price. Asiana Airlines is also applying a fuel surcharge of up to 251,900 won per one-way trip to its New York and Los Angeles routes. This figure represents a whopping 3.2-fold increase from the previous 78,600 won. The rise in aviation fuel surcharges is placing a heavy burden not only on Koreans who frequently travel between Korea and the U.S. but also on Korean Americans.
Choi (42) said, “When looking at it in dollar terms, it feels like travel costs to Korea have become a little cheaper, but I don’t really feel it because airfare prices have risen so much,” adding, “I travel back and forth often because my parents live in Korea, so it is a huge burden if fuel surcharges rise like this.”
The rise in international oil prices triggered by the Iran-U.S. war is tightening the grip on residents by causing gasoline prices in New York State to skyrocket. In this regard, Governor Kathy Hockul held a press conference on the 16th and announced a ‘Consumer Protection Plan’ containing measures such as eliminating hidden energy costs, eradicating excessive rate hikes, and expanding programs to alleviate the burden of energy costs.
Governor Hochul stated on this day, “In just two weeks, gasoline prices in New York State have surged by an average of 21% (62 cents) per gallon and diesel by an average of 28% ($1.13) per gallon,” adding that he would do his utmost to protect consumers as the resulting impact, including inflation, is inevitable.