Won-Dollar Exchange Rate Fluctuates in Mid-1240s Won... Declines on Inflation Slowdown Expectations

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] On the 12th, the KRW-USD exchange rate fell, fluctuating in the mid-1240 won range.

According to the Seoul foreign exchange market on the day, as of 10 a.m., the KRW-USD exchange rate was 1.2 won lower than the previous day's closing price, at 1245.0 won.

The exchange rate, which opened at 1242.0 won, down 4.2 won from the previous day's closing price, is showing a downward trend as expectations of easing inflation are reflected ahead of the release of the U.S. Consumer Price Index (CPI).

Comments by senior officials of the U.S. Federal Reserve (Fed) about slowing the pace of interest rate hikes are also contributing to the decline in the exchange rate. Susan Collins, President of the Federal Reserve Bank of Boston, stated in an interview with the New York Times (NYT) on the 11th (local time) that she supports a 0.25 percentage point rate hike at the Federal Open Market Committee (FOMC) regular meeting on December 1.

On the previous day, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, also emphasized a 0.25 percentage point hike over a 0.50 percentage point increase, assuming a slowdown in the December CPI rise, and similar remarks from other Fed senior officials have been continuing.

Amid expectations of easing inflation, all three major indices of the New York stock market rose overnight.

Experts forecast that the KRW-USD exchange rate will continue its downward trend in the future. Changseop Oh, a researcher at Hyundai Motor Securities, said, "Ahead of the U.S. CPI release, the expectation of inflation slowdown has revived risk appetite, causing the exchange rate to fall," adding, "The global dollar weakness trend is expected to continue, but the pace of exchange rate decline is likely to gradually slow."