Won-Dollar Exchange Rate at 1,220 Won Level for the First Time in 9 Months... "Won to Remain Strong for the Time Being" (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] The won-dollar exchange rate has fallen to the 1,220 won level for the first time in over nine months.

According to the Seoul foreign exchange market on the 30th, the won-dollar exchange rate closed at 1,227.4 won per dollar, down 3.9 won from the previous trading day's closing price. This is the first time the exchange rate has closed in the 1,220 won range since April 15 of last year (closing price 1,229.6 won).

The exchange rate, which started at 1,229.9 won, down 1.4 won from the previous trading day, fluctuated between the high 1,220 won range and the low 1,230 won range as the market awaited the Federal Open Market Committee (FOMC) regular meeting held by the U.S. Federal Reserve (Fed) on the 31st (local time). At this FOMC, the interest rate is expected to be raised by 0.25 percentage points, and market attention is focused on remarks regarding the timing of the interest rate hike pause.

Amine Kwon, a researcher at NH Investment & Securities, said, "Recently, the exchange rate has a strong correlation with the KOSPI, the yuan, and foreign demand and supply," adding, "The improvement in sentiment due to expectations of the end of U.S. tightening and China's reopening has been effective." He continued, "Considering that Korea's exports from January 1 to 20 decreased by 2.7% year-on-year and the trade balance is recording a deficit of 10.26 billion dollars, the current exchange rate seems to be influenced more by sentiment than fundamentals." Researcher Kwon predicted, "Considering the expectation of the end of U.S. tightening in the first quarter and the expected rebound in indicators due to China's reopening after the second quarter, the won is likely to face appreciation pressure for the time being."

Changseop Oh, a researcher at Hyundai Motor Securities, said, "The won-dollar exchange rate has been moving within the range of 1,050 won to 1,250 won in the mid-to-long term, and recently re-entered the range," adding, "However, considering the normalization of the overshooting phase, the speed of the exchange rate decline is expected to slow down in the future."