Won-Dollar Exchange Rate Returns to Mid-1260s Amid US FOMC Caution

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate is fluctuating around the mid-1260 won range.

As of 11:46 a.m. on the 2nd in the Seoul foreign exchange market, the won exchange rate is 1,265.9 won per dollar, up 10.0 won from the previous day's closing price.

The exchange rate opened at 1,264.0 won, up 8.1 won from the previous day, surged sharply in the early session, and has since been fluctuating around the 1,260 won level.

Concerns over U.S. monetary tightening are the fundamental reason behind the recent strong dollar trend. Ahead of the U.S. Federal Open Market Committee (FOMC) meeting scheduled for the 3rd and 4th, tightening concerns have increased, dampening investor sentiment.

The market expects the Fed to raise the benchmark interest rate by 0.5 percentage points at this FOMC regular meeting and announce quantitative tightening (QT) amounting to $95 billion per month.

Additionally, the won-dollar exchange rate has recently shown a synchronized movement with the Chinese yuan and is moving according to Chinese issues. The foreign exchange authorities are also closely monitoring the yuan's movement.

A Bank of Korea official diagnosed, "On the 29th of last month, the Chinese Communist Party Central Politburo indicated support for big tech and real estate to recover from the COVID-19 shock, expressing a willingness to stimulate the economy, which seems to have calmed the soaring exchange rate." He added, "Statements about introducing specific measures to support the healthy development of the platform economy have improved investor sentiment, and since the exchange rate recently tends to follow the yuan's movement, we are keeping a close watch."

With the Chinese mainland stock market closed until the 4th due to the Labor Day holiday, the exchange rate in the afternoon is expected to be influenced by export companies' deferred negotiation (dollar selling) volumes and concerns over the U.S. FOMC.

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