FOMC Tailwind Drives KRW-USD Exchange Rate Fluctuation Around 1340 Won (Update)
Fed Acknowledges Tightening Financial Environment
On the 2nd, the won-dollar exchange rate, which started lower at 1,348.5 won, dropped to the 1,344 won level. This was due to the U.S. Federal Reserve holding the benchmark interest rate steady as expected and acknowledging the tightening of financial conditions overnight.
According to Seoul Foreign Exchange Brokerage on the 2nd, the exchange rate was trading at 1,344.1 won as of 9:31 a.m.
At the November Federal Open Market Committee (FOMC) meeting, the benchmark interest rate was held steady at 5.25-5.50% annually, but the possibility of a rate hike was lowered compared to before.
Jerome Powell, Chair of the Federal Reserve, stated, "We will maintain a restrictive monetary policy stance until we are confident that inflation is on a sustained downward path to 2%," while also noting, "Financial conditions have tightened due to the rise in long-term bond yields over the past few months."
Powell's remarks are interpreted as an acknowledgment that the rise in bond yields led the Fed to hold rates steady. As a result, the market is also highly evaluating the possibility of a rate hold in December. Expectations for the end of rate hikes have increased.
However, regarding rate cuts, he drew a clear line, saying, "The FOMC is currently not considering any rate cuts."
On the same day, U.S. Treasury yields also fell sharply, strengthening risk asset preference sentiment.
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The KOSPI opened at 2,333.76, up 1.4% from the previous day, and the KOSDAQ index also opened at 754.46, up 2.06%.
Despite a significant decline in the New York stock market the previous day, the domestic stock market, including the KOSPI, started with a slight rebound on the 27th. The KOSPI index and the won-dollar exchange rate are being broadcast on the monitor in the dealing room of Hana Bank in Myeongdong, Seoul. Photo by Younghan Heo younghan@
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