Won-Dollar Exchange Rate Fluctuates in the High 1300 Won Range... Slight Weakness Expected Within the Box Range (Update)

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] The won-dollar exchange rate is showing fluctuations in the high 1300 won range amid mixed external factors.

On the 17th, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1310.0 won, up 1.9 won from the previous day, and as of 10:00 AM, it is trading at 1309.7 won.

The won-dollar exchange rate is showing a cautious stance ahead of the release of the minutes from the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve (Fed), which was held last month. Since the minutes, released on the 17th (local time), could provide clues on how much the Fed will raise the benchmark interest rate at next month’s FOMC meeting, a sense of caution continues.

U.S. economic indicators released overnight showed mixed results. July industrial production increased by 0.6% month-on-month on a seasonally adjusted basis, exceeding the market expectation of a 0.3% increase. On the other hand, U.S. housing starts in July recorded 1.449 million units, down 9.6% from the previous month. In particular, single-family housing starts, which account for the largest share of housing starts, fell 10.1% month-on-month to 916,000 units, marking the lowest level since June 2020.

However, the second-quarter earnings of U.S. retail companies such as Walmart and Home Depot significantly exceeded expectations, easing concerns about a consumption slowdown due to inflationary pressures.

Experts predict that the exchange rate will show a slightly weak trend within a box range today. Kim Seung-hyuk, a researcher at NH Futures, said, "The slowdown in U.S. housing starts is a factor supporting dollar strength, but the better-than-expected earnings of U.S. retail companies support both the upper and lower bounds of the dollar amid external factors," adding, "Today, the exchange rate will be driven by supply and demand conditions."

Researcher Kim added, "The exchange rate is expected to shift downward based on early-session selling at high levels and export companies’ negotiation volumes," and "The shift to a stronger Chinese yuan will also support won strength, creating a favorable environment for breaking below 1310 won."