Won-to-dollar exchange rate jumps to 1,320 on US consumer price figures

Posted on : 2023-02-28 16:59 KST Modified on : 2023-02-28 16:59 KST
This was the first time that the won-to-dollar exchange rate exceeded 1,320 during trading since Dec. 8 of last year, when it reached 1,323.30
Monitors at the Hana Bank dealing room in downtown Seoul show the day’s KOSPI and exchange rate figures on Feb. 27. (Yonhap)
Monitors at the Hana Bank dealing room in downtown Seoul show the day’s KOSPI and exchange rate figures on Feb. 27. (Yonhap)

The South Korean foreign exchange market is reeling from the impact of US price indicators, with the exchange rate once again rising above 1,320 won to the dollar.

On Monday, the won-to-dollar exchange rate finished the day at 1,323.00 on the Seoul foreign exchange market, up by 18.20 won from the previous trading day. The number was up by 106.6 won (8.76%) compared with its low this year on Feb. 2 (1,216.40).

This was the first time that the won-to-dollar exchange rate exceeded 1,320 during trading since Dec. 8 of last year, when it reached 1,323.30.

Analysts interpreted the steep jump to the impact of the US’ core personal consumption expenditure (PCE) indicators for January, which were announced on Saturday. With the dollar once again gaining strength globally, the trend was read as translating into weakness for the won.

The US’ PCE index for January significantly exceeded market expectations, with headline inflation and core inflation respectively up by 5.3% and 4.7% compared with the same month in 2022.

Internationally, the dollar has been performing strongly in exchange markets amid predictions of a long-term cycle of additional policy interest rate hikes by the US Federal Reserve as a measure to control inflation.

The dollar index, which shows the value of the dollar relative to currencies in six major countries, stood at 105.214 last Saturday, up by 1.3% from the week before.

Kim Seung-hyuk, an analyst with NH Futures, said Monday that the “sharp rise in the PCE index, which the Fed uses as a standard for prices when making monetary policy decisions, has led to risk-averse behavior contributing to a weak won in Asian foreign exchange markets.”

By Cho Kye-wan, senior staff writer

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