The won-dollar exchange rate is expected to re-enter the KRW 1,410 range. Following U.S. President-elect Donald Trump, Federal Reserve (Fed) Chairman Jerome Powell has maintained a “strong global dollar” stance. The dollar is likely to push the exchange rate higher, as concerns over U.S. inflation suggest the Fed may slow its pace of rate cuts, resulting in an “ultra-strong” dollar.
According to the Seoul Foreign Exchange Brokerage on the 15th, the one-month won-dollar exchange rate traded in the New York differential settlement futures (NDF) market last night was priced at 1,404.5 won. After accounting for the swap point (-0.95 won), the exchange rate is expected to open 0.35 won higher than the closing price of the previous trading day (1,405.1 won, as of 3:30 p.m.).
Fed Chairman Powell’s hawkish (monetary tightening) remarks last night significantly impacted the financial markets. Speaking at an invitational lecture hosted by the Federal Reserve Bank of Dallas, Powell stated, “While inflation continues to persist, Fed officials remain uncertain about where price trends are heading.” He added, “There is a strong likelihood that benchmark interest rates will need to be reduced slowly and cautiously over the coming months.” Powell emphasized that “the U.S. economy is not signaling a need to rush interest rate cuts,” underscoring the economy’s resilience.
According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of the benchmark interest rate remaining unchanged in December surged to 39.4% following Powell’s remarks—a sharp increase from 17.5% the previous day.
Additionally, recent U.S. inflation indicators have heightened caution. The U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) for October showed signs of instability. While producer prices rose 0.2% month-on-month, aligning with expectations, this figure marked a steep decline compared to September’s 0.1%. Core producer prices rose 0.3% month-on-month, exceeding September’s 0.1%. Similarly, consumer prices for October, announced earlier, met expectations, but the slowdown trend appears to have stagnated.
The dollar remains “super strong,” climbing further from the previous day. The dollar index stood at 106.91 as of 6:27 p.m. on the 14th (local time), briefly reaching 107—the highest level in 13 months, since early October last year. The strength of the dollar has weakened Asian currencies, with the dollar-yen exchange rate trading in the 156 yen range and the dollar-yuan exchange rate in the 7.15 yuan range.
The exchange rate is expected to rise as the strong dollar persists and foreign selling continues in the domestic stock market. However, with the foreign exchange authorities issuing verbal intervention remarks the previous day, heightened vigilance against such interventions may help temper dollar-buying activity.
Meanwhile, the U.S. Treasury Department has designated Korea as a country subject to exchange rate monitoring. However, this designation is not expected to significantly impact the foreign exchange market. Min Kyung-won, an economist at Woori Bank, noted, “Korea’s designation as a monitored country is a mechanical registration, as it meets two of the three conditions for inclusion. This is unlikely to have a major impact, as no evidence of exchange rate manipulation was found.”
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트럼프 이어 파월發 ‘달러 쇼크’…환율 1410원 재진입 시도[외환브리핑]https://n.news.naver.com/mnews/article/018/0005886141
By. Taewon Heo