US Recession Fears... Won-Dollar Exchange Rate Rises to Late 1330s (Update)

On the 9th, the won-dollar exchange rate rose to the high 1330 won range. As U.S. employment data showed weaker-than-expected results, rekindling fears of an economic recession, the dollar strengthened, pushing the won-dollar exchange rate up to 1337 won. It is forecasted that the exchange rate will fluctuate between 1300 and 1360 won until the end of the year.

[Image source=Yonhap News]

At 9:26 a.m. on the 9th, the won-dollar exchange rate was trading in the 1338 won range in the Seoul foreign exchange market. On that day, the won-dollar exchange rate opened at 1337.0 won, up 9.4 won compared to the previous trading day (as of 3:30 p.m.). It opened 2.9 won lower than the previous trading day's closing price at 2 a.m. (1339.90 won).

The rise in the won-dollar exchange rate (weakening of the won) is due to the dollar's strength amid recession concerns triggered by U.S. employment data. Earlier, the U.S. Department of Labor announced that nonfarm payrolls increased by 142,000 in August compared to the previous month. Although this was higher than the previous month's increase (89,000), it was significantly below market expectations (165,000). The unemployment rate in August was 4.2%, slightly down from 4.3% in the previous month.

Park Sang-hyun, a researcher at iM Securities, explained, "After the release of the U.S. employment data, market fears of a recession grew, leading to a stronger dollar. Additionally, the continuous selling of domestic stocks by foreigners and negative news about the domestic consumption economy also stimulated the sentiment for won weakness."

It is expected that the won-dollar exchange rate will move within the 1300 to 1360 won range until the end of the year. Researcher Park said, "Due to overlapping uncertainties such as the U.S. Federal Reserve's policy stance, the U.S. presidential election, and domestic economic recession, the possibility of the exchange rate falling further is low. We expect it to move within the 1300 to 1360 won band until the end of the year."