Fed Quantitative Tightening Ends with Exchange Rate at 1201 Won... Highest in 1 Year and 5 Months (Comprehensive)

Dollar Strength Expected to Continue

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The Korean won to US dollar exchange rate closed at 1,201 won following the US Federal Reserve's (Fed) indication of interest rate hikes and quantitative tightening. This is the highest closing level since July 24, 2020 (1,201.5 won).

On the 6th, the won-dollar exchange rate opened at 1,200.9 won, up 4 won. This is the first time since July 27, 2020 (1,201.2 won) that the opening rate exceeded 1,200 won. During the day, it surpassed 1,200 won for the first time in three months since October 12 last year (1,200.4 won). However, the increase narrowed afterward, fluctuating around the 1,199 won level.

The significant impact comes from the Fed suggesting the possibility of implementing quantitative tightening (QT), which reduces the balance sheet beyond just tapering (reducing asset purchases).

As the US actually tightens monetary supply, the dollar's strength is expected to continue.

Regarding this, Oh Changseop, a researcher at Hyundai Motor Securities, analyzed, "Quantitative tightening actually reduces the money supply itself, which acts as a factor strengthening the pressure for dollar appreciation," adding, "It is expected to stabilize around the 1,200 won level in the first half of the year, and the dollar's strength is likely to continue in the second half as well."

This content was produced with the assistance of AI translation services.