US Inflation Indicator Slows, Won-Dollar Exchange Rate Hits 5-Month Low (Update)

[Image source=Yonhap News]

The won-dollar exchange rate closed in the 1260 won range due to a slowdown in U.S. inflation indicators.

According to the Seoul foreign exchange market on the 14th, the won-dollar exchange rate closed at 1,265.8 won, down 8.2 won from the previous trading day. It is the first time in about five months since February 14 (1,269.4 won) that the won-dollar exchange rate has fallen to the 1260 won range at the close.

The exchange rate opened at 1,268 won, down 6.0 won, and in the afternoon, the decline widened to 1,260.35 won before rebounding.

The U.S. Producer Price Index (PPI) for June rose 0.1% month-on-month following the Consumer Price Index (CPI), falling short of expectations, which reflected hopes for the end of tightening and contributed to the decline in the exchange rate.

James Bullard, president of the Federal Reserve and a prominent hawk (favoring monetary tightening), resigned on the 13th (local time), which also acted as a factor easing the tightening atmosphere and contributed to the exchange rate decline.

Seung-hyuk Kim, a researcher at NH Futures, said, "With the PPI also falling short of expectations following the U.S. CPI, market expectations for price stability have risen, causing the dollar index to fall further and U.S. Treasury yields to plunge sharply." He added, "As risk appetite revives, foreign investors' net buying continues in the domestic stock market, creating a favorable environment for the exchange rate decline."

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