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.

As of 9:06 AM on the 30th, in the Seoul foreign exchange market, the won-dollar exchange rate against the U.S. dollar is 1,485.7 won, 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 decision-making body, three members expressed minority opinions that curbed expectations for future rate cuts, leading to a strong dollar.

These members agreed to freeze the interest rate 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 value of the dollar against 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 contributing to the rise in the exchange rate.

U.S. President Donald Trump announced that he would maintain the maritime blockade against Iran until a nuclear deal with Iran is reached. Iran also heightened tensions by signaling a strong response.

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

The won-yen cross rate was 927.7 won per 100 yen, up 1.68 won from the previous day's closing price as of 3:30 PM.