US 'Hawkish Pause' Pushes Won-Dollar Exchange Rate Up 9.6 Won to Close at 1339.7 Won

On the 21st, employees are working in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Jo Yongjun jun21@

The US Federal Reserve (Fed) hinted at the possibility of an additional interest rate hike within the year, causing the won-dollar exchange rate to rise by nearly 10 won.

According to the Seoul foreign exchange market on the 21st, the won-dollar exchange rate closed at 1,339.7 won, up 9.6 won from the previous trading day.

Based on the closing price, this is the highest level in about a month since the 23rd of last month (1,339.7 won).

On that day, the exchange rate opened at 1,332.5 won, 2.4 won higher than the previous day's closing price, and showed an upward trend during the session, rising as high as 1,342.2 won.

Although the Fed kept the benchmark interest rate unchanged at 5.25?5.50% at the Federal Open Market Committee (FOMC) meeting on the 20th (local time), it was interpreted that the dollar strengthened as the possibility of a 0.25 percentage point hike within the year was left open.

Fed Chair Jerome Powell said at a press conference that day, "We are prepared to raise rates further," and "We will maintain a tight monetary policy until we are confident that inflation has declined and stabilized at the policy target level."

According to the dot plot showing the FOMC members' projections, the members expect the year-end interest rate (median) to remain at 5.6%, the same as the previous forecast, and raised the year-end rate for next year to 5.1%, up 0.5 percentage points from the previous forecast.

This means that the Fed will likely raise interest rates by 0.25 percentage points once more within the year, and the rate cut next year will be smaller than initially expected, at about 0.5 percentage points.

On that day, the KOSPI closed at 2,514.97, down 44.77 points (1.75%) from the previous session, and the KOSDAQ also fell by 2.50%.