On the 1st, the won-dollar exchange rate surpassed 1,400 won during the day. This is due to the strong showing of the U.S. economy, resulting in a stronger dollar.
According to the Seoul foreign exchange market on that day, the won-dollar exchange rate was recorded at 1,400.1 won as of 10:39 a.m. The last time the exchange rate surpassed 1,400 won during the day was 2.5 months ago on May 19 (1,401.3 won, based on high prices).
The personal consumption expenditures (PCE) price index for the U.S., announced the previous night, showed an upward trend that exceeded expectations, and the dollar is showing strength. According to the Department of Commerce, the PCE index for the U.S. in June rose by 0.3% compared to the previous month, expanding its upward trend compared to May (0.2%).
The weekly employment indicators in the U.S. also showed a favorable performance. According to the weekly unemployment insurance claims report released by the Department of Labor, the number of initial unemployment claims for the week ending on the 26th of last month was reported as 218,000, seasonally adjusted. This is an increase of 1,000 from the previous week.
According to Investing.com, the dollar index (DXY), which shows the value of the dollar against the currencies of six major countries, recorded 100.12 as of 10:48 a.m. The day before, it surpassed the 100 mark and has maintained a high level for two consecutive days, achieving its highest record in over two months.
As the U.S. economy shows robustness, expectations for interest rate cuts by the Federal Reserve are receding. According to the Chicago Mercantile Exchange's FedWatch, participants in the U.S. federal funds rate (FF) futures market see a 58.7% chance that rates will be held steady at the September Federal Open Market Committee (FOMC) meeting. This is an increase of 6.3 percentage points from the previous day (52.4%) and up 17.5 percentage points from a week ago (39.2%).
Experts expect the dollar strength to continue for the time being. Min Kyung-won, a researcher at Woori Bank, noted, "The won-dollar exchange rate is expected to rise due to the global strong dollar following the recovery of the dollar index to 100 points and the risk aversion triggered by the resurgence of Trump uncertainty," adding, "The domestic stock market today is also likely to decline due to the slowdown in foreign net purchases, contributing to the formation of a weak won atmosphere."