The won-dollar exchange rate started lower at 1,446 won. This was due to the easing of the strong dollar pressure as the U.S. Personal Consumption Expenditures (PCE) inflation rate fell short of market expectations.
According to the Seoul Foreign Exchange Market on the 23rd, the won-dollar exchange rate opened at 1,446.0 won, down 5.4 won from the previous transaction day's closing price (based on 3:30 p.m.) of 1,451.4 won. It is the first time in three transaction days since the 18th (1,439 won) that the exchange rate has fallen below 1,450 won at the opening.
The U.S. inflation indicators were lower than expected, causing the strong dollar to pause. The U.S. Department of Commerce announced that the November U.S. Personal Consumption Expenditures (PCE) price index increased by 2.3% compared to the same month last year. This is lower than the market expectation of 2.5%.
The PCE inflation rate is the most critical indicator for the Federal Reserve's (Fed) financial policy decisions. As the PCE inflation rate dropped below market expectations, the strong dollar slightly eased. As of 9:55 a.m., the Dollar Index, indicating the value of the dollar against the currencies of six major nations, stood at 107.8, down from the high of 108.48 on the 19th.
Min Kyung-won, a researcher at Woori Bank, noted that "the exchange rate will likely show a movement in the early to mid-1,440 won range, supported by foreign exchange authorities' market stabilization measures and the inflow of export negotiation volumes," adding, "In particular, as we enter the quiet year-end market, the exchange rate is likely to be influenced by intra-regional demand and supply."
Wi Jae-hyeon, an economist at NH Futures, stated, "Today's won-dollar exchange rate is expected to drop to the mid-1,440 won range," adding that "the overall slowdown of the PCE and its sub-items is meaningful material for curbing the strong dollar." Wi also noted, "Last week's foreign investor selling in the stock market, which had supported the downward pressure on the won exchange rate, will also calm down somewhat."