On the first day after the six-day Lunar New Year holiday, the won-dollar exchange rate opened at 1,446 won, up nearly 15 won. This increase is attributed to the Federal Reserve's decision to implement a 'hawkish freeze' during the holiday, as well as expectations that tariff measures from the Donald Trump administration regarding Mexico and Canada are set to commence, which is fueling a strong dollar.
On the 31st, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,446.0 won, which is an increase of 14.7 won compared to the previous trading day’s closing price of 3:30 p.m. on the 24th.
First, on the 29th during the Lunar New Year holiday (local time), the Federal Reserve held a monetary policy decision meeting. At the Federal Open Market Committee (FOMC), the Federal Reserve unanimously decided to maintain the benchmark interest rate at 4.25% to 4.5% per annum. This marks the first meeting since President Donald Trump took office after three consecutive rate cuts last year.
Federal Reserve Chairman Jerome Powell said in a subsequent press conference, "There is no need to rush rate cuts," noting that "the world's largest economy, the United States, remains solid, and there is no need to hurry in adjusting policy positions." This reflects the uncertainty of the Trump administration's monetary policy, which has led to a strong dollar.
With the impending implementation of President Trump's tariff measures, the dollar's strength has intensified. President Trump reaffirmed on the 30th (local time) in the White House office during a meeting with reporters that a 25% tariff would be imposed on Canada and Mexico starting February 1. Following that statement, the dollar index surged. The dollar index, which reflects the value of the dollar against six major currencies, dropped to around 106 on the 27th, but has since rebounded and is now above 108.
The exchange rate is expected to continue to rise, but observations suggest that further increases may be limited in the late 1,440 won range. As the end of the month approaches, export firms are expected to offer dollar selling, while concerns about intervention from foreign exchange authorities and the pension fund's currency hedge transactions are likely to moderate the pace of the exchange rate increase.
Meanwhile, at the same time, the won-yen exchange rate is trading at 940.39 won per 100 yen, up 18.37 won compared to the previous day's reference price of 922.02 won. The Bank of Japan has recently raised the benchmark interest rate from 0.25% to 0.50% on the 24th and has left the possibility of further rate increases open, which appears to be showing a stronger yen. The yen-dollar exchange rate currently stands at 154.2 yen, down about 2 yen from a week ago.