The won-dollar exchange rate finished weekly trading at 1,345.9 won at 3:30 p.m. on the 11th, up 6.7 won (0.5%) from the previous trading day's weekly close. On the same basis, it had stayed in the 1,330-won range for two consecutive trading days from the 9th before rising back to the 1,340-won range.
The rate matched market expectations that day. As tensions in the Middle East worsened, international oil prices and U.S. Government Bonds yields rose together, boosting the dollar. On the 10th (local time), Brent crude, the global benchmark, rose 6.34% from the previous transaction day to $107.63. West Texas Intermediate (WTI) rose 6.69% to $102.48. The U.S. 30-year Government Bonds yield climbed intraday to 5.354%, the highest since June 2007.
As a result, the likelihood that the Federal Reserve (Fed) will raise its benchmark rate in October increased sharply. When oil prices rise, they push up consumer prices, leaving the Central Bank little choice but to respond with rate hikes. When the United States tightens liquidity, Asian currency such as the won tend to weaken.
Foreign investors' net selling of 2.2915 trillion won in domestic stocks that day also affected the exchange rate. Because there is a tendency to sell domestic stocks and exchange the proceeds into dollars, net selling is cited as a factor pushing the rate higher.