Unexpected US growth... early-morning session dollar-won exchange rate breached 1410 won intraday

On news of Q2 GDP increasing 3.8%

Dollar-won exchange rate jumped sharply intraday

The dollar-won exchange rate expanded its gains in overnight trading and closed just below 1410 won. As the US's Q2 economic growth far exceeded market expectations, a 'strong dollar-weak won' trend emerged.

At 2 a.m. on the 26th (Korea time), the dollar-won rate closed at 1409.30 won, up 11.80 won from the previous Seoul market close. On an overnight basis, it was the highest in about four months since May 13 (1416.30 won).

According to the US Commerce Department, the seasonally adjusted final figure for Q2 GDP rose 3.8% at an annualized rate from the previous quarter. It is a sharp rebound from the previous quarter (-0.5%). It is 0.5% percentage points higher than the market estimate and the preliminary figure of 3.3%.

It is also the highest growth rate in about two years since Q3 2023 (4.7%). The dollar index, which reflects the dollar's value against six major currencies, quickly surpassed the 98 mark and continued its upward trajectory. The dollar-won rate also jumped to an intraday high of 1411.00 won.

US weekly employment indicators were also interpreted as putting upside pressure on the dollar. According to the US Labor Department, initial jobless claims for the week ending the 20th were 218,000 on a seasonally adjusted basis, below the market estimate (235,000).

Bill Adams, chief economist at Comerica Bank, said, "GDP and unemployment insurance claims data will help alleviate the period of anxiety triggered by downward revisions to employment data such as the weak August jobs report."

Reporter Song Jong-hyun scream@hankyung.com