Won Opens at 1,544.5 Per Dollar as Weak US Jobs Data Weighs on Greenback

The won opened sharply stronger against the dollar after weak US employment data reduced expectations for another Federal Reserve rate increase.

In Seoul on July 3, the won opened daytime trading at 1,544.5 per dollar, up 11.3 won from the previous session. The currency closed at 1,540 won in overnight trading the day before and was also reported to have traded in the 1,540 won range in the offshore non-deliverable forward market.

US nonfarm payrolls rose by just 57,000 in June from the previous month, far below market expectations of 115,000. The weaker-than-expected reading led markets to scale back the chances of an additional Fed rate hike, pushing the dollar lower.

"Even if inflation rises somewhat, it would be difficult to expect a rate hike in July," Ian Lyngen, head of US rates strategy at BMO Capital Markets, said.

Min Kyung-won, an analyst at Woori Bank, said the won-dollar exchange rate was set to gap lower at the open on broad dollar weakness. He said June nonfarm payrolls came in well below expectations, reducing expectations for a Fed rate hike, while the yen's strength was also supporting the won.

Still, Min added that foreign investors' reverse remittance flows and importers' buying on dips could support the lower end of the won-dollar exchange rate. Reverse remittances tied to stock-market rebalancing appear to be mostly complete, though further confirmation is needed.