As the hawkish US interest rate cuts and strong economic indicators continue to support a strong dollar, the won-dollar exchange rate closed in the 1450 won range for the second consecutive day. It is expected that the won-dollar exchange rate will face upward pressure until early next year, depending on President Trump's inauguration and the US policy interest rate stance.
On the 20th, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1451.4 won, down 0.5 won from the previous trading day as of 3:30 PM. The exchange rate opened at 1450.0 won, down 1.9 won from the previous day, then slightly declined before returning to the 1450 won range and continuing its upward trend.
The won-dollar exchange rate has remained in the 1450 won range for two consecutive days. The previous day, the rate opened at 1453.0 won, up 17.5 won from the previous day, fluctuated around 1450 won, and closed at 1451.9 won in weekly trading. The won-dollar exchange rate exceeding 1450 won is the first time in 15 years and 9 months since March 2009 during the global financial crisis.
Earlier, on the 18th (local time), the US Federal Reserve (Fed) hinted at slowing the pace of future interest rate cuts, strengthening the preference for safe-haven assets. This led to a stronger dollar and consequently a weaker won (exchange rate increase).
Strong US economic indicators exceeding expectations also contributed to the dollar's strength. On the 19th (local time), the US Department of Commerce announced that the final GDP growth rate for the third quarter was 3.1%, revised upward by 0.3 percentage points from the preliminary figure of 2.8% announced last month.
The dollar index (DXY), which measures the value of the dollar against six major currencies, remained around the 108 level for the second consecutive day.
The Bank of Japan (BOJ) also kept its policy interest rate unchanged, which contributed to the yen's weakness and thus the rise in the exchange rate. The yen-dollar exchange rate briefly approached the 158 yen level during the day, reaching its highest level in five months. The yuan-dollar exchange rate is trading around 7.29 yuan.
The won-dollar exchange rate is expected to face upward pressure until early next year. However, since there are no major events until the end of the year, volatility is expected to be limited.
Park Sang-hyun, a researcher at iM Securities, said, "Since there are no major events until the end of the year, the National Pension Service's volume will control the upward trend around the low 1450 won range," but added, "However, depending on President Trump's pledge fulfillment and the Fed's policy stance early next year, the won-dollar exchange rate will steadily face upward pressure."
Kim Chan-hee, a researcher at Shinhan Investment Corp., explained, "We see the upper limit of the exchange rate at the high 1480 won range until early next year. Domestic political risks are unlikely to be resolved in the short term, so the exchange rate will face upward pressure for the time being. However, since uncertainties related to Trump have already been reflected preemptively, the rise in the exchange rate early next year will be limited."
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