On the 28th, in the Seoul foreign exchange market, the won-dollar rate opened at 1,462.5 won per U.S. dollar, down 2.4 won from the previous day. It is seen as reflecting expectations that the Bank of Korea (BOK) will not lower the base rate for the time being.
The Bank of Korea (BOK) held the Bank of Korea's monetary policy committee the previous day and said it would keep the base rate unchanged at 2.50%. In particular, it deleted the phrase "continue a rate-cutting stance" from the rate decision statement, suggesting the rate-cut cycle may end early.
If the Bank of Korea (BOK) keeps the base rate unchanged instead of cutting it, the rate gap with the United States will not widen further, acting as a factor strengthening the won (a lower won-dollar rate). That is because it can relatively stem investors from moving funds overseas, including to the United States.
The current U.S. base rate is 3.75%–4.00%, which is 1.5 percentage points (p) higher than Korea at the upper end, and if the Bank of Korea (BOK) lowers the base rate further, demand to invest in the United States rather than in Korea will increase.