US Interest Rate Cut Expectations Revive... Currency Exchange Rate Plummets at Close (Update)

[Image source=Yonhap News]

As the rise in the U.S. Consumer Price Index (CPI) slowed down, raising expectations for a U.S. interest rate cut, the won-dollar exchange rate closed at 1,345 won. This marks the first time in 42 days since April 4 (1,347.1 won) that the won-dollar exchange rate has fallen to the 1,340 won range at the closing price.

On the 16th, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,353.8 won, down 15.3 won from the previous day, fluctuated by more than 20 won during the session, widening the decline, and closed at 1,345 won, down 24.1 won from the previous day's closing price.

Earlier, on the 15th (local time), the U.S. Department of Labor announced that the CPI rose 3.4% year-on-year, marking the first slowdown in the upward trend this year. After rising 3.1% in January, the CPI steadily increased in February (3.2%) and March (3.5%), but the rise slowed down last month. The CPI also rose 0.3% month-on-month, slightly below the market expectation of 0.4%.

The dollar index, which indicates the value of the dollar against the currencies of six major countries, was down 0.03% from the previous day at 104.32 as of the afternoon.

With growing expectations for a U.S. interest rate cut, South Korea's stock market and exchange rate were also affected that day. Choi Ye-chan, a researcher at Sangsangin Securities, explained, "The market was relieved as U.S. inflation in April showed a slowdown as expected," adding, "At the same time, confidence in two interest rate cuts by the Federal Reserve (Fed) within this year came into sight, acting as a factor strengthening the won." He further added, "Going forward, the exchange rate is expected to move around the 1,350 won level."

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