▲ The U.S. Federal Reserve
As the U.S. central bank, the Federal Reserve (Fed), kept its benchmark interest rate unchanged, the won-dollar exchange rate fell to the 1,430-won range today (the 30th).
In the Seoul foreign exchange market, the won-to-dollar exchange rate closed at 1,437.4 won as of 3:30 p.m., down 9.3 won.
The exchange rate fluctuated throughout the session, dropping to 1,435.90 won at one point in the morning before reversing course to hit a high of 1,447.70 won, and then dropping back below 1,440 won.
Based on the intraday low, this is the lowest level since February 27 (1,430.50 won) just before the outbreak of the Middle East war, and based on the 3:30 p.m. closing price, it is the lowest level since February 26 (1,425.80 won).
Overnight, the U.S. Fed kept its benchmark interest rate frozen at 3.50–3.75%.
While three members of the Federal Open Market Committee (FOMC) voted for a rate hike, Chair Kevin Warsh's press conference was interpreted as dovish (favoring monetary easing).
Warsh assessed that financial conditions have tightened due to rising Treasury yields since the June FOMC, stating, "This has given us a certain degree of reassurance that the Fed has the ability and capacity to accomplish its goals."
While financial markets are pricing in a high probability of one or more rate hikes this year, expectations for a September hike are diminishing.
In addition, the exchange rate has recently faced downward pressure from the inflow of funds related to SK Hynix's American Depositary Receipts (ADRs) and the release of dollar-selling (nego) orders by exporters at the end of the month.
Min Kyung-won, a researcher at Woori Bank, noted that a significant portion of the ADR and exporter nego volumes have been digested, saying, "Rather than showing a clear direction, it is fluctuating up and down while absorbing one-off supply and demand issues."
He also viewed that expanded investment demand in the U.S. stock market due to volatility in the domestic stock market and net buying of domestic stocks by foreigners are acting as support levels from above and below.
Min added, "I think this is a phase of testing whether the exchange rate can drop any further from here."
Lee Min-hyuk, an economist at KB Kookmin Bank, stated, "It is difficult to view that the exchange rate will rebound immediately just because the ADR conversion materials are exhausted," pointing out that subsequent foreign stock trends will be a key variable.
Foreigners net-purchased 1,340.3 billion won worth of shares in the KOSPI market today.
The KOSPI closed down 69.68 points (1.23%) from the previous day at 5,593.56.
The dollar index, which measures the greenback's value against six major currencies, hovered around the 100-day moving average today before rising 0.188 to 101.000.
The yen-dollar exchange rate rose 0.254 to 163.595 yen.
The won-yen cross exchange rate fell 5.95 won to 878.61 won per 100 yen.
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