On the 24th, the won started in the 1,471 range against the U.S. dollar, down about 4 won from the prior session's closing price. Hints from key U.S. Federal Reserve (Fed) officials about the possibility of a rate cut boosted expectations for an easing of the strong dollar.
In the Seoul foreign exchange market, the won-dollar rate opened at 1,471.9 won, down 3.7 won from the prior session's weekly transaction closing price (as of 3:30 p.m.). It fell to as low as 1,469.1 won early in the session, then reversed higher to 1,471.90 won as of 9:42 a.m.
On the 21st, the rate spiked intraday to 1,477.9 won, the highest level since on Apr. 9, when it reached 1,487.6 won (high price basis, including weekly and overnight trading). The resurgence of the artificial intelligence (AI) bubble argument played a major role, as foreign investors were net sellers of 2.823 trillion won in stocks in Korea's KOSPI market.
However, the rate turned lower as expectations for a Fed benchmark rate cut revived. The trigger was a comment by John Williams, president of the Federal Reserve Bank of New York, considered the No. 2 at the Fed, who attended an event in Santiago, Chile, on the 21st (local time) and said, "Given that current monetary policy is somewhat restrictive, I believe there is room to adjust the policy rate."
According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds rate (FF) futures market is pricing in a 69.4% chance that the Fed will lower the benchmark rate to 3.50%–3.75% at the Federal Open Market Committee (FOMC) meeting on Dec. 9–10. That is up 25 percentage points from a week earlier (44.4%).
Min Kyung-won, an economist at Woori Bank, said, "President John Williams hinted at a December rate cut, helping to calm financial market jitters," adding, "As the burden of the strong dollar also eases, the overheated selling sentiment in the won, a risk currency, is expected to subside somewhat."