The won-dollar exchange rate, which threatened to reach 1,490 won at the end of last month, closed in the 1,460 won range for two consecutive trading days. Despite positive U.S. labor and manufacturing indicators, potential foreign exchange hedging by the National Pension Service and hints of government intervention limited the rise.
On the 3rd, the won-dollar exchange rate in the Seoul foreign exchange market closed at 1,468.4 won, up 1.8 won from the previous day's closing price in intraweek transactions (as of 3:30 p.m.) of 1,466.6 won. It has remained in the 1,460 won range for two consecutive transaction days following the previous day's rate of 1,469.1 won.
On this day, the exchange rate opened at 1,469 won, then dropped steadily to reach 1,464.9 won around 11:47 a.m. It then reversed to rise to 1,468.6 won by 2:17 p.m., before slightly declining to close.
The impact of the Federal Open Market Committee (FOMC) reducing the forecast for rate cuts this year from four times to two times during the December meeting last year continues to be seen. Reflecting this, the exchange rate has surpassed 1,450 won intraday for nine consecutive trading days.
Strong U.S. economic indicators overnight also fueled the strengthening of the dollar. The U.S. Department of Labor announced that the number of new unemployment benefits claims for the previous week (Dec. 22-28) stood at 211,000, down 9,000 from the previous week. This figure was below the market expectation of 225,000.
However, compared to the end of last year when the exchange rate soared to 1,486.7 won (Dec. 27), the sharp rise seems to be somewhat calming. The previous day, the foreign exchange authorities mentioned the potential for foreign exchange hedge volumes appearing from the National Pension Service, increasing market caution, and exporters also sold dollars, supporting the upper limit.
The buying spree by foreigners in the domestic stock market also had an impact. On this day, foreigners made a net purchase of 280.9 billion won in the stock market. Buoyed by foreign buying, the Korea Composite Stock Price Index (KOSPI) closed at 2,441.92, up 32.98 points (1.79%) from the previous transaction day's close.
Min Kyung-won, a researcher at Woori Bank, noted, 'Yesterday, the Bank of Korea's announcement of the tactical foreign exchange hedge from the National Pension Service quickly heightened market caution about the volume.' Adding, 'The burden of exporters selling at high prices in standby in the mid-1470 range is also one of the factors suppressing the overheating of long (buy) sentiment.'