The won-dollar exchange rate plummeted more than 10 won ahead of the Monetary Policy Committee's interest rate decision. This was influenced by concerns over a U.S. economic recession, which led to a weaker dollar and a relatively stronger won.
On the 17th, in the Seoul foreign exchange market, the won-dollar exchange rate started at 1,416.0 won, down 10.7 won from the previous transaction closing price (around 3:30 p.m.). It is the first time since Dec. 6 of last year (1,416.0 won) that the exchange rate started in the 1,410 won range.
The decline in the exchange rate was due to concerns over a U.S. economic recession that emerged overnight. The U.S. industrial production index for March was reported to have decreased by 0.3% from the previous month to 103.9, which was a larger decline than the market expectation (-0.2%). Although retail sales increased by 1.4% compared to the previous month, exceeding expectations, this is seen as a temporary phenomenon resulting from increased automobile sales ahead of tariff implementation.
Market concerns were solidified when Jerome Powell, chair of the Federal Reserve (Fed), mentioned the possibility of economic slowdown. Powell noted, "The level of tariff increases announced by the administration so far is much higher than expected," adding, "The impact on the economy is likely to be similar, including rising inflation and slowing growth."
In this regard, the dollar index, which briefly exceeded 100, has fallen back to the 99 level. According to Investing.com, as of 9:43 a.m. that day, the dollar index recorded 99.50. The dollar index is an index that shows the dollar's value against the currencies of six major countries.
Experts expect that the won-dollar exchange rate could decrease further today. Min Kyung-won, a researcher at Woori Bank, said, "Given that the increase in won value has not been significant compared to the recent declines in dollar value, foreign capital is expected to flow in due to the weak dollar," adding, "I expect the exchange rate to be in the early 1,410 won range today."