Pressure on Trump for Rate Cuts Eases Strong Dollar... Japanese Rate Decision is a Variable

President Donald Trump publicly demanded a rate cut from the Federal Reserve, easing the pressure on the strong dollar. On this day, the market expected a turning point in the won-dollar exchange rate, which continued to trade in the 1,430 won range, depending on the Bank of Japan (BOJ)'s rate decision at noon.

On the 24th, the won-dollar exchange rate in the Seoul foreign exchange market started weekly trading at 1,439.5 won, up 2.2 won from the previous day. Before the start of weekly trading, the closing price at 2 a.m. was 1,434.0 won, and in the overnight New York Non-Deliverable Forward (NDF) market, the one-month won-dollar was finally quoted at 1,434.5 won.

The dollar index, which shows the value of the dollar against the major six currencies, was formed at 108.11 as of 9:30 a.m.

In the global financial market, the dollar faced downward pressure due to President Trump's public demand for a rate cut. On the 23rd (local time), Trump delivered a keynote speech via video link at the World Economic Forum in Switzerland. There, he said, "I will demand an immediate rate cut," and "The world should follow us and lower rates as well."

He also revealed plans to request a reduction in oil prices from Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC). He said, "I will ask Saudi and OPEC to lower oil prices," adding, "If oil prices go down, the war between Russia and Ukraine will end immediately."

A rate cut by the Federal Reserve is generally considered a factor for dollar weakness. A drop in oil prices leads to a decrease in inflation, which supports a rate cut decision.

Meanwhile, the biggest event in the exchange rate market on this day is the BOJ's monetary policy meeting scheduled for noon. The BOJ will announce its rate decision at noon, and at 3:30 p.m., Governor Kazuo Ueda will hold a press conference to explain the decision. The market is dominated by voices expecting a rate hike.

Kookmin Bank predicted, "If Governor Ueda strongly hints at an additional rate hike during the press conference, the yen will enter a strong phase, and the won will follow suit, attempting to fall below the 1,430 won range for the won-dollar."

Kookmin Bank's proposed exchange rate range for the day is 1,425~1,440 won.

Reporter Jeon Beom-jin forward@wowtv.co.kr