Won Re-Enters 1,540-Per-Dollar Range as Fed Rate-Cut Hopes Recede

The won climbed back into the 1,540-per-dollar range as expectations for Federal Reserve interest-rate cuts later this year weakened, adding to views that the Fed may keep policy tight for longer than expected.

In Seoul trading on June 19, the won opened at 1,537.4 per dollar, 10.3 won weaker than the previous session, and rose above the 1,540 level intraday. The move came after the Federal Open Market Committee's regular meeting on June 18 damped hopes for rate cuts this year.

The Fed left its benchmark interest rate unchanged. But its dot plot, which reflects officials' rate projections, signaled that any easing this year could be limited. Markets are focusing on the possibility that US interest rates will remain elevated for now.

The projections showed 18 officials expect rates to remain unchanged through the end of this year, up from seven previously. By contrast, three officials projected a 0.25 percentage-point cut, five saw a 0.50 percentage-point cut, and one expected a 0.75 percentage-point cut.

Geopolitical tensions between the US and Iran showed signs of easing somewhat, but that was not enough to reverse the won's decline. In the foreign-exchange market, the shift in monetary policy expectations was seen as the bigger driver.

The dollar index, which measures the greenback against six major currencies, rose to 100.9. That marked its highest level in about a month, since May.