Won-Dollar Exchange Rate Drops Below 1400 Won Intraday After a Month... Offshore Dollar Selling Increases

On the 7th, the KOSPI closed at 2,371.79, up 23.36 points (0.99%). The KOSDAQ rose 6.59 points (0.95%) to 700.48, and the won/dollar exchange rate ended the day at 1,401.2 won, down 18.0 won. The photo shows the dealing room at the Myeongdong Hana Bank headquarters on the same day. [Image source=Yonhap News]

The Korean won to US dollar exchange rate fell below 1,400 won at one point during the session amid expectations that the US Federal Reserve (Fed) will slow the pace of interest rate hikes.

On the 7th, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,401.2 won, down 18 won from the previous trading day's closing price. The rate started the day at 1,411 won, down 8.2 won in the morning, and fell to as low as 1,399.6 won during the session.

This is the first time in a month since October 6 (1,397.1 won) that the won-dollar exchange rate dropped below 1,400 won.

The decline in the exchange rate is interpreted as being influenced by growing expectations that the Fed may soon slow the pace of monetary tightening.

As the dollar's strength eased, investors' risk-averse sentiment softened, and foreign investors continued buying in the domestic stock market, leading to increased dollar selling mainly in offshore markets.

Since the release of US employment data on the 4th, there has been mixed sentiment regarding the pace of the Fed's interest rate hikes.

According to the US Department of Labor's October nonfarm payroll data, nonfarm jobs increased by 261,000 in October, exceeding market expectations, but the unemployment rate was 3.7%, higher than the Dow Jones (3.5%) and Bloomberg (3.6%) forecasts.

Because of this, some view that the US labor market has begun to cool at a slow pace, and expectations for the Fed to slow the pace of tightening have also expanded.

The KOSPI closed up 0.99% compared to the previous session. Foreign investors net purchased 110.8 billion won in the KOSPI market that day, and the yuan strengthened on expectations that China's 'zero-COVID' policy will be eased, which also appears to have increased downward pressure on the won-dollar exchange rate.

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