Won-Dollar Rate Falls From 1,500-Won Range, Emerging as Key BOK Policy Variable
The won-dollar exchange rate has continued to ease, trading in the 1,410-won range as both U.S. consumer and producer prices show signs of moderating. Expectations that the Federal Reserve is unlikely to raise interest rates again this year have strengthened, boosting appetite for risk assets.Accord
The won-dollar exchange rate has been declining, trading between 1,410-won and 1,424.80-won as U.S. consumer and producer prices appear to be easing. The expectation that the Federal Reserve will not raise interest rates again this year has increased, fueling demand for risk assets. The won was expected to open lower than the previous day's close, reflecting the decline in the New York nondeliverable forward (NDF) market.
The exchange rate had previously surged to 1,559.2 won but is now nearing the 1,300-won range. This appreciation is mainly due to large-scale dollar selling by domestic companies and foreign investors purchasing stocks. A major factor behind this change has been the stabilization of U.S. inflation, with the Producer Price Index remaining unchanged for July.
The year-on-year increase slowed to 4.7% from the previous month's 5.5%. The probability of the Federal Reserve maintaining interest rates in September, as measured by CME FedWatch, has risen to 67.6%, up from 59.4% the previous day. Global financial market indicators, including falling Brent crude and West Texas Intermediate prices, are also supporting the won's appreciation.
The Bank of Korea (BOK) will meet on August 27 to determine if further rate hikes are necessary, considering the won's exchange rate, inflation, household lending, and other economic indicators.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
