Won-Dollar Exchange Rate Falls to Early 1230 Won Range... Eyes on BOJ

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate has fallen to the low 1230 won range.

According to the Seoul foreign exchange market on the 16th, as of 11 a.m., the won-dollar exchange rate is 1,233.1 won, down 8.2 won from the previous trading day.

On that day, the exchange rate opened at 1,238.0 won, down 3.3 won from the previous day's closing price, and showed a downward trend, falling to 1,232.7 won at 10:59 a.m.

The dollar is weakening as risk appetite revives due to the slowdown in U.S. inflation, and major Asian currencies such as the yuan and yen are strengthening, supporting further depreciation of the won.

The global foreign exchange market's attention is focused on the Bank of Japan (BOJ) results. At the BOJ's monetary policy meeting scheduled for the 17th-18th, it is expected that the possibility of additional measures related to yield curve control (YCC) distortions will determine whether the yen strengthens further, as the BOJ reviews the side effects of large-scale monetary easing.

Park Sang-hyuk, a researcher at Hi Investment & Securities, said, "The consumer price inflation rate in Tokyo in December was 4% year-on-year, exceeding market expectations, and some side effects such as price instability due to excessive monetary easing have materialized, increasing the likelihood of additional tightening measures by the BOJ."

The yuan's strong trend is also expected to continue. There is an analysis that additional monetary easing measures by the People's Bank of China may be implemented around the Lunar New Year holiday as a stimulus measure, which will act as a factor for further yuan appreciation.

Researcher Park predicted, "From the supply and demand perspective, only recent factors supporting won strength, such as the expansion of net purchases of domestic stocks by foreigners driving the domestic stock price rise, are highlighted, so the won-dollar exchange rate will attempt to stabilize in the 1230 won range."