Exchange Rate Drops 28.1 Won Amid US Consumer Prices Below Expectations

Expectation of 'End of Interest Rate Hikes'

As the US consumer price inflation rate fell below expectations, expectations for the end of interest rate hikes grew, causing the won-dollar exchange rate to drop nearly 30 won on the 15th.

On that day, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1300.8 won, plunging 28.1 won from the previous day.

The exchange rate opened at 1307 won, down 21.9 won, and during the session showed a decline of more than 30 won, even falling below 1300 won.

This was influenced by the announcement of the US Consumer Price Index (CPI) for October released overnight. The US October CPI rose 3.2% compared to the same month last year, falling short of market expectations. The core CPI, which excludes volatile energy and food prices, also recorded a 4% increase compared to the same month last year, continuing its deceleration trend.

As a result, the perception that the Federal Reserve's (Fed) interest rate hike cycle has ended spread. According to the Chicago Mercantile Exchange (CME) FedWatch, the market sees about a 98% chance that the Fed will hold rates steady next month.

With the slowdown in CPI inflation, the 10-year US Treasury yield fell to the 4.4% range, and the dollar index also dropped by 1.48%.

[Image source=Yonhap News]

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