The Won-Dollar Exchange Rate Hits 1320 Won Amid Recession Fears... Gains Narrow After Sharp Rise

[Asia Economy Reporter Seo So-jeong] Amid ongoing aftershocks from the U.S. Federal Open Market Committee (FOMC), the won-dollar exchange rate touched 1,320 won intraday before narrowing its gains.

On the 16th at the Seoul foreign exchange market, the won-dollar exchange rate surged sharply, reaching 1,320.0 won shortly after opening, but has gradually reduced its upward momentum. Due to growing fears of a U.S. economic hard landing, the rate opened at 1,319.0 won, up 15.9 won, but as of 11 a.m., it has fallen below the 1,310 won level.

Following the Federal Reserve's 0.50 percentage point rate hike at this year's final FOMC meeting and the forecast of prolonged monetary tightening, along with the European Central Bank (ECB) showing a similar stance, market concerns over an economic recession have spread.

Overnight, the Bank of England (BOE) raised its benchmark interest rate from 3.0% to 3.5%, and the ECB also increased its rate from 2.0% to 2.5%, each by 0.50 percentage points. All three major indices on the New York Stock Exchange declined simultaneously overnight.

Additionally, concerns over an economic recession amid weakening U.S. real economy indicators are stimulating safe-haven demand. U.S. retail sales in November recorded -0.6%, significantly below the expected 0.2%, and November industrial production also declined by -0.2%, showing a slowdown in both consumption and production. Meanwhile, U.S. initial jobless claims came in at 211,000, below the expected 230,000, indicating robust employment and inflation control pressures.

Kim Seung-hyuk, a researcher at NH Futures, said, "The slowdown in U.S. consumption and production, along with employment levels being more resilient than expected, is creating a strong dollar environment," adding, "The fact that China's retail sales indicators have similarly slowed down compared to the U.S. could act as a factor weakening the yuan and exert downward pressure on the won." However, Kim added, "At the year-end point, the emergence of substantial export company negotiation volumes could partially curb the upward pressure."

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