Won-Dollar Exchange Rate Falls Below 1,250 Won for the First Time in 7 Months (Update)

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] The won-dollar exchange rate fell below the 1,250 won level for the first time in seven months.

According to the Seoul foreign exchange market on the 9th, as of 9:17 a.m., the won-dollar exchange rate recorded 1,246.8 won, down 21.8 won from the previous trading day. Due to a slowdown in U.S. wage growth and reduced expectations for tightening, the won-dollar exchange rate dropped to its lowest level since June 3 last year (1,238.60 won).

The exchange rate, which opened at 1,255 won, down 13.6 won from the previous trading day, is further extending its decline as risk appetite revived in the morning.

Experts see a high possibility of further declines in the won-dollar exchange rate, given that the December U.S. employment data has strengthened expectations for a baby step (0.25 percentage point interest rate hike) at the February Federal Open Market Committee (FOMC) meeting, and the yuan is also expected to strengthen.

Park Sang-hyun, a researcher at Hi Investment & Securities, said, "As global risk appetite recovers, the value of the dollar is falling," adding, "December consumer prices are a variable, but if the financial market smoothly absorbs December consumer prices as well, it is expected to reinforce the assumption of a baby step at the February FOMC and support the end of the first-quarter rate hike cycle." Park also said, "In the case of the yuan, which has strong correlation with the won, the recent strong reopening policy by the Chinese government has led to additional strengthening, and the expansion of foreign net purchases of domestic stocks is also acting as a factor lowering the won-dollar exchange rate," forecasting, "The downward trend in the exchange rate will continue for the time being."

Kim Seung-hyuk, a researcher at NH Futures, said, "The risk appetite reflected in last week's strong U.S. stock market is also a factor leading to won strength against the dollar, providing a favorable environment for the exchange rate decline," and predicted, "Due to the weak dollar trend and the decline in government bond yields, the won-dollar exchange rate is expected to test support below 1,250 won and show a limited downward trend."

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