Ahead of the Trump Administration's Inauguration... Rise in Both Won Value and Treasury Bond Yields [Hankyung Forex Market Watch]

On the 20th, a day before the inauguration of U.S. President-elect Donald Trump, the won-dollar exchange rate fell to the early 1450 won range (the value of the won rose). Amid market watchfulness, the won showed a generally strong trend, touching the 1440 won level at one point during the day. Treasury bond yields rose across the board (bond prices fell).

On this day, the won-dollar exchange rate in the Seoul foreign exchange market (as of 3:30 PM) ended weekly trading at 1451.70 won, down 6.60 won from the previous trading day. The exchange rate started trading at 1460 won, up 1.70 won from the previous trading day, then rose to 1461 won before steadily declining during the day. It fell to 1448.50 won at one point in the afternoon before rebounding to the 1450 won range just before closing. It was the first time in two trading days since the 16th that the intraday exchange rate touched the 1440 won level.

The market is seen as showing a watchful stance ahead of Trump's inauguration. Meanwhile, there appears to be downward pressure due to expectations of export companies' negotiation volumes (dollar selling).

U.S. economic indicators exceeded market expectations. The possibility of worsening U.S.-China relations also eased for the time being as President-elect Trump had a phone call with Chinese President Xi Jinping. The yuan also showed some strength, influencing the won's appreciation. The won is often regarded as a proxy currency for the yuan, showing similar trends.

At the same time, the dollar index, which represents the value of the dollar against the currencies of six major countries, was 109.079, down 0.05% from the previous trading day.

The won-yen fiscal exchange rate was 930.13 won, down 6.81 won from the previous trading day's 3:30 PM standard price.

The yen-dollar exchange rate recorded 156.07 yen, up 0.28%.

Treasury bond yields rose across the board (bond prices fell). In the Seoul bond market on this day, the 3-year Treasury bond yield ended trading at 2.623% per annum, up 0.035 percentage points from the previous trading day. The 5-year bond yield rose 0.027 percentage points to 2.715% per annum. The 10-year and 30-year bonds recorded 2.868% and 2.684% per annum, up 0.055 percentage points and 0.014 percentage points, respectively.

Kang Jin-kyu, josep@hankyung.com