On the 31st, the won-dollar exchange rate started trading at 1,390 won, nearly 7 won higher than the previous trading day following the news of the U.S. interest rate freeze.
On that day, the won-dollar exchange rate in the Seoul foreign exchange market began trading at 1,390.0 won, which was 6.9 won higher than the weekly closing price of the trading day (as of 3:30 p.m.).
Overnight, the U.S. Federal Open Market Committee (FOMC) maintained the interest rate at 4.25% to 4.5%, leading to a strong dollar. This marks the fifth consecutive freeze following those in January, March, May, and June. The market believes that the strong dollar resulting from the FOMC's decision will exert upward pressure on the exchange rate.
The dollar index, which indicates the dollar's value against six major currencies, has approached the 100 mark. According to Investing.com, as of 9:50 a.m. that morning, the dollar index was recorded at 99.78. It even rose to 99.943 that morning, nearing 100.
However, the rise in the exchange rate was limited by news of the conclusion of the U.S.-Korea trade negotiations. Both countries agreed to reduce the reciprocal tariff imposed on Korean products imported into the U.S. from 25% to 15%. A tariff rate of 15% will also be applied to Korean automobiles.
In addition, Korea has decided to establish a total fund of $350 billion, including a $150 billion shipbuilding cooperation fund and a $200 billion investment fund in sectors such as semiconductors, nuclear power, secondary batteries, and biotechnology. However, the domestic agricultural and livestock market will not be further opened.
Min Kyung-won, a researcher at Woori Bank, said, "Today's exchange rate will likely show pressure for stronger won due to the reduced uncertainties related to the trade negotiations and favorable big tech earnings. However, the strong dollar and local dollar demand for payments will support the lower end of the exchange rate."