Soaring won·dollar exchange rate closes in the 1400-won range after four months

The won·dollar exchange rate closed in the 1400-won range in overnight trading for the first time in about four months. This is interpreted as the result of euro weakness due to weakening business sentiment in Germany combined with the cautious stance of Jerome Powell, chair of the U.S. Federal Reserve (Fed).

At 2:00 a.m. on the 25th, the won·dollar rate closed at 1403.8 won, up 11.2 won from the previous Seoul foreign exchange market close. It is the highest level since the overnight closing price on May 14 (1404.5 won). A closing price in the 1400-won range is the first since May 16 (1400.0 won). Compared with this session's daytime trading (9:00 a.m.~3:30 p.m.) closing price of 1397.50 won, it rose 6.3 won.

The won·dollar rate entered the New York session around 1400 won in the London market as the euro weakened following a deterioration in Germany's business sentiment indicator.

According to the Ifo Institute, Germany's business climate index for September was 87.7, below the market forecast of 89.4. It fell 1.3 points from the previous month (89.0).

The dollar also faced upward pressure in the New York session, linked to rising U.S. Treasury yields amid Powell's cautious stance. As a result, the won·dollar rate rose intraday to as high as 1405.5 won.

Powell said the previous day, "In the short term, inflation risks are tilted to the upside and employment risks are tilted to the downside," adding, "This is a difficult situation, and the fact that there are risks on both sides means there is no risk-free path."

Marvin Lo, senior global market strategist at State Street, assessed, "The dollar is slightly stronger against most of the major 10 countries (G10) currencies, but it still remains unstable and range-bound."

Ko Jeong-sam Hankyung.com reporter jsk@hankyung.com