Exchange rate rises to mid-1,480 won range on 'hawkish' Fed

Exchange rate rises to mid-1,480 won range on 'hawkish' Fed

The won/dollar exchange rate rose to the mid-1,480 won range as expectations for future U.S. benchmark interest rate cuts decreased.

In the Seoul foreign exchange market on the 30th, the won-dollar exchange rate against the U.S. dollar is 1,485.7 won as of 9:06 AM, up 6.7 won from the previous day's weekly closing price (as of 3:30 PM).

The exchange rate started at 1,486.5 won, up 7.5 won, and is fluctuating around a similar level.

Although the U.S. Federal Reserve (Fed) froze the benchmark interest rate at 3.50-3.75% per annum at the Federal Open Market Committee (FOMC), its monetary policy-setting body, the dollar is strengthening as three committee members expressed a minority opinion that blocked expectations for future rate cuts.

These committee members agreed to the rate freeze, but opposed including a 'dovish stance' in the statement, which would signal that a rate cut is more likely than a rate hike in the future.

As the Fed's decision was interpreted as a 'hawkish freeze', the dollar index, which indicates the dollar's value against a basket of six major currencies, rose to the early 99s this morning. It is currently slightly down at 98.821.

The ongoing instability in the Middle East is also a factor in the exchange rate's rise.

U.S. President Donald Trump announced his intention to maintain a naval blockade against Iran until a nuclear agreement with Iran is reached. Iran also warned of a strong response, escalating tensions.

The yen/dollar exchange rate also rose, exceeding 160 yen. It rose to 160.460 yen overnight and is currently slightly down at 160.090 yen.

The won/yen arbitration exchange rate is 927.7 won per 100 yen, up 1.68 won from the previous day's closing price at 3:30 PM.