Won-Dollar Exchange Rate Closes at 1202.8 Won... Amid US Tightening Pace

Jerome Powell, Chairman of the Federal Reserve (Fed)
[Photo by Yonhap News]

The U.S. Federal Reserve (Fed) held its Federal Open Market Committee (FOMC) regular meeting on the 26th (local time) and strongly hinted at a rate hike in March, causing the won-dollar exchange rate to surpass the 1,200 won mark.

According to Seoul Foreign Exchange Brokerage on the 27th, the won-dollar exchange rate closed at 1,202.8 won, up 5.1 won from the previous trading day (1,197.7 won). Earlier that day, the exchange rate opened at 1,201.0 won, up 3.3 won from the previous day. During the session, it even rose to 1,203.6 won at one point.

The remarks made by Fed Chair Jerome Powell at the press conference following the FOMC regular meeting were interpreted as somewhat hawkish, which increased market anxiety.

The Fed decided to keep the target range for the policy rate unchanged (0.00?0.25%) and maintain the tapering (asset purchase reduction) pace to conclude it in March.

In the policy statement, it explained, "Due to inflation significantly exceeding 2%, it seems appropriate to raise the policy rate soon," and "there is room to raise rates without damaging the labor market."

At the press conference, Jerome Powell said, "The upcoming balance sheet reduction will be implemented earlier and at a faster pace than before, but the Fed's main policy tool is the policy rate." As expectations grew that the Fed would accelerate tightening, the dollar strengthened.