As the controversy over the dismissal of Jerome Powell, Chair of the U.S. Federal Reserve (Fed), unfolded, the won-dollar exchange rate surpassed 1,390 won.

On the 17th, the closing price of the won-dollar exchange rate in the Seoul foreign exchange market was recorded at 1,392.6 won, up 6.9 won from the previous day (based on 3:30 p.m.). This is the highest level since May 19th (1,397.8 won).

On the 17th, the KOSPI and the won-dollar exchange rate closing prices are displayed on the electronic board in the dealing room of Hana Bank's head office in Jung-gu, Seoul. /Courtesy of News1

The exchange rate started at 1,388.0 won, up 2.3 won from the previous day, and exceeded 1,390 won around 9:40 a.m. After fluctuating around 1,391 won, it rose to 1,392.9 won before the market closed.

The foreign exchange market was shaken overnight as U.S. media reported on the possibility of Powell's dismissal. According to CBS and others, the previous day, President Donald Trump asked Republican lawmakers for their opinions on Powell's dismissal during a private meeting, and the lawmakers agreed.

Concerns arose in the market that the mid-term dismissal of the Chair of the Central Bank could undermine the independence of the central bank. As a result, risk appetite weakened, causing U.S. Treasury revenue to surpass 5%, and the S&P 500 index to decline by 0.7% during trading.

However, as President Trump stepped in to calm the situation, the market somewhat stabilized. He noted that the potential dismissal of Powell could lead to market confusion, stating, "The possibility of dismissal is very low."

Yet, as the controversy surrounding Powell's potential dismissal continued, the dollar showed strength. The dollar index (DXY), which measures the value of the dollar against six foreign currencies, increased by 0.52% to 98.780 compared to the previous day. The dollar-yen exchange rate rose by 0.92 yen to 148.77 yen.

Wi Jae-hyeon, an economist at NH Futures, stated, "The prolonged uncertainty itself is a material that stimulates risk-averse sentiment," adding, "While Trump's intention regarding Powell's dismissal and the actual possibility of dismissal are separate issues, this prolonged uncertainty could act as a risk-averse factor along with tariffs."

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