On the 17th, the won-dollar exchange rate moved in the mid-1,450-won range early in the session on the back of a stronger dollar. However, gains were limited by caution over possible intervention by the foreign exchange authorities.
In the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,451 won, down 6 won from the prior session's after-hours transaction closing price at 3:30 p.m. It then rose about 6 won to 1,456.9 won as of 10:04 a.m.
The rise in the exchange rate stems from waning expectations for a U.S. Federal Reserve (Fed) interest rate cut. Dallas Federal Reserve Bank President Lorie Logan said it would be difficult to support a rate cut at the December Federal Open Market Committee (FOMC) meeting while U.S. inflation remains high. Kansas City Fed President Jeffrey Schmid also noted that a restrictive monetary policy stance is needed.
As a result, the dollar is strengthening. According to Investing.com, the U.S. dollar index (DXY), which measures the dollar against six major currencies, was up 0.09% from the previous day at 99.39.
However, the rise in the exchange rate is being limited by the possibility of intervention by the foreign exchange authorities. On the 14th, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, Bank of Korea Governor Rhee Chang-yong, Financial Services Commission (FSC) Chairman Lee Eog-weon, and Financial Supervisory Service Governor Lee Chan-jin indicated an intention to step into the market, saying in a message to reporters, "Under the recognition that expectations for a weaker won could become entrenched, we will respond by actively using available tools."
Wi Jae-hyun, an economist at NH Futures, said, "With expectations for a Fed rate hold in December and weakness in the British pound and the yen, the global strong-dollar mood has strengthened," adding, "However, factors such as the calming of long (buy) sentiment in the exchange rate due to the authorities' verbal intervention are reasons for a pullback in the rate."