Opening Price Returns to Pre-Martial Law Levels
Dollar Weakens Ahead of Federal Reserve Rate Decision
Asian Currencies Show Strength
After a four-day closure due to the long holiday, the Seoul foreign exchange market reopened on May 7, with the won/dollar exchange rate starting at its lowest level in about six months. This was attributed to the weakening of the US dollar ahead of the US Federal Reserve's (Fed) interest rate decision, as well as the continued strength of Asian currencies.
On the 7th, as the three major New York stock indices all fell, the won/dollar exchange rate dropped below 1,400 won. The status board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul, displayed the KOSPI and won/dollar exchange rate. On that day, the KOSPI opened at 2,576.62, up 16.83 points from the previous session, and the won/dollar exchange rate started the day at 1,380.0 won, down 25.3 won. May 7, 2025 Photo by Cho Yongjun
The market opened at 1,380.0 won per dollar, down 25.3 won from the previous trading day. This was the lowest level since November 6 of last year, when it reached 1,374.0 won. It was also the first time since December 2 of last year that the won/dollar exchange rate fell into the 1,300-won range during weekly trading. The situation has reverted to a time before the domestic political uncertainty caused by the imposition of martial law and before the outcome of Donald Trump's US presidential election became clear.
The opening drop compared to the previous weekly closing rate was also the largest since April 10 of last month (38.1 won), when the US suspended reciprocal tariffs.
The sharp decline in the won/dollar exchange rate was analyzed as a result of the strong performance of Asian currencies in overseas markets, such as the New York foreign exchange market, during the holiday. The Taiwan dollar surged after local media reported on May 1 that, as part of a US-Taiwan trade agreement, there may have been discussions allowing for a stronger Taiwan currency. As Taiwanese companies aggressively sold US dollars, the dollar/Taiwan dollar exchange rate fell to its lowest level in three years. This led to strength in other emerging Asian currencies, such as the Singapore dollar and the Thai baht.
Meanwhile, the US dollar weakened ahead of the Fed's interest rate decision, resulting in a relatively stronger won. The Fed is scheduled to conclude its two-day Federal Open Market Committee (FOMC) meeting on May 7 and announce its benchmark interest rate. The market is certain that the Fed will keep the rate unchanged at the current 4.25-4.5% range.
Market experts believe the sharp decline reflects the drop during the holiday period, and they are watching to see if the rate will fall to the low 1,370-won range. They analyze that the exchange rate could experience further volatility depending on US monetary policy and global economic trends.
Meanwhile, the won/yen cross rate was traded at 969.67 won per 100 yen, up 1.37 won from the previous day's 3:30 p.m. reference rate. International gold prices rebounded to the $3,400-per-ounce range as demand for safe-haven assets strengthened.
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