The won-dollar exchange rate stood at 1,358.3 won around 10 a.m. on the 4th, down 1 won (0.07%) from the prior session's weekly close. After printing 1,356.3 won at 9 a.m., the rate has been trending higher.
Forecasts suggest the rate will fluctuate in the 1,350-won range today. The rate finished weekly transactions at 1,359.3 won the day before, the lowest in 14 months, and some say this level could hold.
The biggest driver of the weaker rate is a softer dollar. Even as expectations build that the United States could raise its benchmark rate, a U.S. Federal Reserve (Fed) official said rates could be kept on hold. When the United States leaves rates unchanged, the dollar tends to weaken and the exchange rate tends to fall.
Christopher Waller, a Fed governor, said on the 3rd (local time) that he would support holding rates if inflationary pressures show signs of easing. John Williams, president of the New York Federal Reserve Bank, also said that with energy price gains not spreading to other institutional sectors, the pace of inflation is easing.
Government bond yields and global oil prices fell afterward. The U.S. 10-year Treasury yield, a global bond market benchmark, fell 0.03 percentage point from the previous transaction day to 4.761%. Brent crude, the international oil benchmark, slipped 0.12% to $95.52 a barrel. As risk asset sentiment recovered, the S&P 500 rose 1.06% and the Nasdaq composite gained 1.4% to close higher.
A strengthening Japanese yen also appears likely to affect the rate. The won and the yen tend to move in the same direction, so yen strength can reinforce won strength. The yen-dollar rate broke through 160 yen on the 1st, but is around 155.8 yen today.
However, some say the rate may not fall much. As the rate declines, demand to buy dollars on the cheap can increase. Min Kyung-won, a researcher at Woori Bank, said, "Since the rate has fallen in a short span, dip-buying could emerge as a breather," adding, "FX demand for overseas stock investing is also limiting the rate's downside."