Won-Dollar Exchange Rate Closes in 1200 Won Range... "Buying Demand Expected from Dollar Strength"

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] The won-dollar exchange rate closed higher in the 1,200 won range. This is interpreted as being influenced by the strength of the dollar due to concerns over the acceleration of tightening by the U.S. Federal Reserve (Fed).

On the 7th, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,200.7 won, up 3.7 won from the previous trading day. The exchange rate started at 1,198.8 won, up 1.8 won from the previous day, and during the session, it reached 1,201 won as U.S. employment indicators showed better-than-expected results.

Experts predict that the won-dollar exchange rate will fluctuate around the 1,200 won level for the time being.

SK Securities economist Ahn Young-jin said, "As Asian stock markets broadly showed weakness, risk asset avoidance occurred," adding, "The demand for buying in anticipation of a stronger dollar continued, leading to the exchange rate closing higher that day."

Economist Ahn analyzed, "From now on, the sensitivity of the foreign exchange market may come more from the European Central Bank (ECB) than the Fed," and added, "Right after the ECB monetary policy meeting, the euro's strength and the dollar's weakness were not insignificant, so after recognizing the 1,200 won peak in the won-dollar exchange rate, it is highly likely to move downward from the current level."

Meritz Securities researcher Lee Seung-hoon predicted, "The ECB is likely to pursue a more gradual normalization than the market expects," and said, "The dollar is expected to maintain its current level for the time being, with the possibility of a dollar weakening trend in the second half of the year."