On the 19th, the won-dollar exchange rate sharply dropped to the high 1320 won range during the trading session.
In the Seoul foreign exchange market that day, the won-dollar exchange rate closed at 1,334.0 won at 3:30 PM, down 23.6 won from the previous trading day.
This is the lowest level since March 21, when the closing price recorded 1,322.4 won.
The exchange rate started trading at 1,350.9 won and widened its decline, falling to 1,329.8 won around 3:05 PM.
The decline in the won-dollar exchange rate is interpreted as being due to the weakening of the dollar.
The dollar index, which shows the relative value of the dollar against the currencies of six major countries, was 102.3 that day, approaching the lowest level of the year.
It is analyzed that expectations for a U.S. interest rate cut in September have increased, causing the dollar value to fall and the won to strengthen.
Recent major U.S. economic indicators have shown somewhat sluggish performance. According to the U.S. Department of Commerce, last month’s new housing starts in the U.S. decreased by 6.8% from the previous month to 1,238,000 units (seasonally adjusted annual rate). This figure is significantly below the expert forecast of 1,340,000 units compiled by Dow Jones.
The housing construction sector is slowing down, and combined with a slowdown in the manufacturing index and inflation rate, experts see a high possibility that the U.S. will cut interest rates next month.
Park Sang-hyun, a senior advisor at iM Investment Securities, explained, "Along with the relief in U.S. inflation in July, the slowdown in real economy indicators centered on housing data has strengthened expectations for a Federal Reserve (Fed) rate cut while increasing downward pressure on the dollar."
It is also understood that strong foreign net buying in the Korean stock market last Friday had an effect. At that time, foreigners net purchased over 1 trillion won worth of Korean stocks, which is interpreted as exerting upward pressure on the won in the foreign exchange market that day.
Experts believe that if the U.S. continues to cut interest rates after September, the won-dollar exchange rate could trend downward.
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