Won-Dollar Rate Falls 8.9 Won to Close at 1,350.4, Lowest in 14 Months

The won-dollar exchange rate closed in the low 1,350-won range, falling 8.9 won to 1,350.4 won in Seoul on Sept. 4. That marked its lowest weekly trading close since June 30 last year, when it stood at 1,350.0 won.

The decline came as concern over further tightening by the U.S. Federal Reserve, which had weighed on the won, eased. Federal Reserve Governor Christopher Waller said on Sept. 3 that recent indicators showed some signs of disinflation. He added that if the trend continued in data due over the next two weeks, he would lean toward keeping the policy rate at its current level.

Expectations for a September rate hike fell, pushing U.S. Treasury yields lower and weakening the dollar. Market participants said this improved appetite for risk. Continued dollar selling by exporters and pressure for a stronger yen also created conditions more favorable to the won.

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Recent indicators show some signs of disinflation. If this trend continues in the data released over the next two weeks, I would lean toward supporting keeping the policy rate at its current level.

The dollar index, which measures the U.S. currency against six major currencies, stood at 99.01 at 3:31 p.m., up from 98.91 the previous day. Still, demand from importers settling payments and buyers seeking to purchase foreign currency at lower exchange rates limited the won's gains.

Min Kyung-won, a researcher at Woori Bank, said buying could return as the exchange rate had fallen quickly. He added that currency demand for overseas stock investments could also provide some support at the lower end.

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As the exchange rate has fallen in a short period, buying may enter as the market takes a breather, and currency demand for overseas stock investments may also provide some support at the lower end.