The US inflation rate exceeded expectations, pushing the won-dollar exchange rate past 1,310 won on the 27th.
On that day, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,315.0 won, up 10.2 won from the previous trading day, maintaining an upward trend. As of 9:43 a.m., the won-dollar exchange rate was trading at 1,314.6 won.
Based on the intraday high, it surpassed the 1,306.2 won recorded on the 22nd, setting a new yearly high. This is the highest level in about two months since December 16 last year (1,320.0 won).
The sharp rise in the won-dollar exchange rate is due to increased expectations of US inflation, which has strengthened the dollar's value.
According to the US Department of Commerce, the core Personal Consumption Expenditures (PCE) price index for January rose 4.7% compared to the same period last year, exceeding market expectations.
If US inflationary pressures continue to grow, the Federal Reserve (Fed) is likely to maintain a tight monetary policy for a longer period, which inevitably supports dollar strength.
Recently, hawkish remarks from Fed officials have been coming in succession. Loretta Mester, President of the Cleveland Federal Reserve Bank, stated that "the Fed should quickly raise the benchmark interest rate above 5% and maintain it at that level."
As US inflation concerns increase, some argue that the final US interest rate could exceed the existing market forecast of 5.25?5.5% and reach the 6% range. At the Federal Open Market Committee (FOMC) meeting scheduled for next month, the possibility of a 'big step' (a 0.5 percentage point increase in the benchmark interest rate) is also being discussed.
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