YONGSAN GARRISON, South Korea — The dollar continued its precipitous drop against the Korean won, hitting a seven-year low Tuesday as Korean economists predicted no bottom in sight.
The dollar dipped below 1,100 Korean won Tuesday, ending the day trading at 1,090.30 won, its lowest point since Nov. 24, 1997, when it hit 1,085.
And it could get worse. A report by the Lehman Brothers financial firm predicted the dollar would fall to the 1,000 won mark in the next 12 months.
The weak dollar already has hit servicemembers and civilians in the pocketbook. In interviews last week, several told of rising bills, higher rents and unexpectedly high prices in shopping districts.
Military officials hope to stem the pain with an increase in the cost of living allowance (COLA) for servicemembers in South Korea. Officials from the 175th Finance Command have said the most recent adjustment was an increase Oct. 1, and Pentagon officials likely will continue adjusting the rate as the exchange rates worsen.
“Exchange rate fluctuations are factored into the COLA process, are continually evaluated and can be adjusted on a bi-weekly basis increasing or decreasing a soldier’s allowance,” the 175th FINCOM’s Web site reads.
“The committee can adjust COLA as often as every payday. Of course, just as it takes time to process an allotment change, it takes a while for a COLA change to show up in your pay.”
More than 16,000 U.S. Forces Korea personnel completed the most recent COLA survey, intended to get an accurate reading of rates and allowances.
Korean financial institutions see no immediate end to the dollar’s gradual slide, saying both the Korean and American governments appear unconcerned.
“The authorities seem to acknowledge the dollar’s weakness is a global trend it can’t buck,” Kim Doo-hyeon, a currency trader at Korea Exchange Bank, told the Korea Times.
