Growing Momentum for September US Rate Freeze; Won-Dollar Exchange Rate Hits 10-Month Low

The won-dollar exchange rate fell to the early 1,410 won range today (the 18th) as expectations for a benchmark interest rate hike by the U.S. Federal Reserve (Fed) receded.

In the Seoul foreign exchange market today (the 18th), the closing price (former daytime trading close) for the won against the U.S. dollar at 3:30 p.m. was tallied at 1,411.8 won, down 1.2 won from the previous day (1,413.0 won).

Based on the 3:30 p.m. closing price, this is the lowest since October 2 of last year (1,400 won).

The exchange rate started trading at 1,417.0 won but immediately turned downward, dropping below 1,410 won during the session.

It fell to 1,408.0 won around 12:06 p.m., recording its lowest level in 11 days since the 7th (1,407.3 won).

The exchange rate faced downward pressure after U.S. retail sales for July, announced on the 14th (local time), fell short of market expectations.

Retail sales decreased by 0.6% compared to the previous month, significantly missing market projections (a 0.1% increase).

Following last week's Consumer Price Index (CPI) and Producer Price Index (PPI), retail sales also came in below market expectations, widening expectations that the Fed will freeze its benchmark interest rate at next month's Federal Open Market Committee (FOMC) meeting.

Consequently, the dollar weakened.

The dollar index, which measures the value of the greenback against six major currencies, stood at 99.650.

It rose 0.18, but remained below 100.

In addition, the release of dollar-selling orders by exporters added downward pressure on the exchange rate.

Foreign investors net-purchased 91.4 billion won today, maintaining a buying advantage for the fifth consecutive trading day.

However, due to geopolitical uncertainties in the Middle East, the downward momentum for the exchange rate appeared somewhat limited.

The 60-day negotiation deadline under the ceasefire memorandum of understanding (MOU) signed between the U.S. and Iran in June expired on the 17th without tangible results.

As diplomatic solutions deadlock, geopolitical caution is raising its head once again.

The won-yen cross rate fell 4.61 won to 883.89 won per 100 yen.

The yen-dollar exchange rate rose 0.69 yen to 159.032 yen per dollar.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.