Ahead of US FOMC, Exchange Rate at 1240 Won... "Upward Momentum Will Slow"

On the 16th, as concerns about inflation eased due to a sharp drop in international oil prices and the US February Producer Price Index falling short of expectations, the KOSPI also started higher. This is a view of the Hana Bank dealing room in Jung-gu, Seoul. On that day, the KOSPI opened at 2,649.85, up 28.32 points (1.08%), and the won-dollar exchange rate opened at 1,141.2 won, down 1.6 won. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Seo So-jeong] As the regular meeting of the U.S. Federal Reserve (Fed) approaches, the won-dollar exchange rate is hovering around the 1240 won level amid a wait-and-see stance.

On the 16th, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1241.2 won, down 1.6 won from the previous trading day, and has been fluctuating around the 1240 won level. The exchange rate, which reached 1244.4 won during the previous day’s session, marking a two-year high, dropped to the 1230 won level in the morning but rose back to the 1240 won level.

The won-dollar exchange rate has maintained the 1240 won level for three consecutive trading days after breaking through 1240 won for the first time in one year and ten months on the 14th.

Expectations for negotiations between Russia and Ukraine caused international oil prices to plunge to the $90 range, easing inflation concerns and leading to a decline in the dollar index. The three major New York stock indices closed with gains around 2%. The KOSPI index also started up 28.32 points (1.08%) from the previous trading day at 2649.85 and is showing an upward trend.

The U.S. Fed is expected to raise the benchmark interest rate by 0.25 percentage points from the current 0?0.025% at the Federal Open Market Committee (FOMC) regular meeting held on the 15th?16th (local time). If the Fed adopts a more hawkish (monetary tightening preference) policy stance than expected, the dollar could strengthen further.

Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "The direction of the dollar will be determined by the results of the U.S. FOMC," adding, "Foreigners’ stock selling in the domestic stock market is also a major variable." Oh predicted, "Due to the Russia-Ukraine situation, exchange rate volatility is increasing. Although the dollar’s upward trend will continue for the time being, since it has risen excessively recently, the upward momentum is likely to slow down somewhat due to intervention by authorities."