[Asia Economy Reporter Eunbyeol Kim] As fears of inflation originating from the US drive the value of the dollar sharply higher, the won-to-dollar exchange rate is rising significantly on the morning of the 13th.
As of 9:05 AM in the Seoul foreign exchange market, the won-dollar exchange rate stood at 1,132.1 won per dollar, up 7.4 won from the previous day's closing price. The exchange rate initially rose to 1,133.3 won but has slightly eased to trade in the low 1,130 won range. This is the first time since April 1 (1,131.9 won) that the exchange rate has recorded a closing price in the 1,130 won range.
The stronger-than-expected rise in the US Consumer Price Index (CPI) has heightened inflation concerns, causing government bond yields to surge (bond prices to fall), and the dollar has also strengthened in tandem with bond yields. As of 8:34 PM Eastern Time on the 12th (local time), the dollar index was moving around 90.76.
With inflation fears reducing risk asset preference, foreign capital is flowing out of the domestic stock market, and the attractiveness of the won is declining, which could keep the exchange rate elevated for some time. Min Kyung-won, a researcher at Woori Bank, said, "There is a high possibility of continued foreign capital outflow from the domestic stock market, and combined with the dollar's strength due to risk aversion, the won-dollar exchange rate, which had been confined to a narrow range, is rising."
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