On the 11th, the won-dollar exchange rate fluctuated within a narrow range and closed in the low range of 1,430 won. The strength of the dollar was largely due to anticipation of the announcement of the U.S. November Consumer Price Index (CPI).
On this day, the closing rate of the won-dollar exchange in the Seoul foreign exchange market (as of 3:30 p.m.) recorded at 1,432.2 won, up by 5.3 won from the previous day. It was the first time in two days that the exchange rate exceeded 1,430 won since the 9th when it was 1,437 won.
The exchange rate started at 1,434 won, up by 7.1 won from the previous day. Shortly after the market opened, at around 9:08 a.m., it increased to 1,434.7 won before declining and reaching 1,429 won as of 12:01 p.m. However, it rose again, ending the week in the low range of 1,430 won.
The exchange rate increase was due to the strengthening of the dollar ahead of the announcement of the November Consumer Price Index, a key indicator that could influence the Federal Reserve's (Fed) interest rate decision in December. A higher inflation rate could slow down the Fed's rate cuts and bolster the strong dollar.
The Dollar Index (DXY), which reflects the value of the dollar against six major currencies, is moving in the mid-106 range. Given that it recorded the low to mid-106 range the previous day, it has increased somewhat. The dollar-yen exchange rate is trading at 151 yen, while the dollar-yuan exchange rate is in the 7.24 yuan range.
The expectation that the Bank of Japan's (BOJ) interest rate hike might be delayed also acted as a factor for the weakening of the won. Japan's recently announced third-quarter Gross Domestic Product (GDP) growth rate was 1.2%, exceeding the market expectation of an annual rate of 1.0%. As a result, the rate hike expected for December may be delayed to January of next year. If the rate hike is delayed, the yen weakens, and the value of the won, which is synchronized with the yen, also decreases.
In the domestic market, foreign investors sold stocks on a net basis, which pushed up the exchange rate. Foreigners sold around 130 billion won in the Korea Composite Stock Price Index (KOSPI) market and around 70 billion won in the Korea Securities Dealers Automated Quotations (KOSDAQ) market. However, KOSPI closed at 2,442.51, up 24.67 points (1.02%) from the previous session, as institutional buying intensified.
Park Sang-hyun, a researcher at iM Securities, noted, “The won weakened today as the dollar strengthened ahead of the U.S. CPI index announcement,” adding, “There was also an influence from expectations that the BOJ's interest rate hike could be delayed to January.”
At the same time, the fiscal exchange rate between the won and yen was 944.29 won per 100 yen, down 0.05 won from the previous day's 3:30 p.m. standard. The yen-dollar exchange rate rose by 0.38% to 151.670 yen from the previous day.