The won-dollar exchange rate fell only slightly despite global dollar weakness.
The won-dollar exchange rate closed at 1,466.9 won per dollar on Wednesday, down 1.9 won from the previous trading day. The rate opened 4.0 won higher at 1,472.8 won and rose to as high as 1,473.2 won immediately after the opening, but reversed course and turned lower as it gave back most of its gains amid the global dollar weakness trend.
However, the decline was limited as a wait-and-see stance prevailed ahead of the U.S. Federal Open Market Committee (FOMC) meeting scheduled for this week.
Compared to major currencies, the won remains in a weak phase. The Dollar Index (DXY), which measures the dollar's value against six major currencies, fell on every day over the past week except January 4. During the same period, the yen-dollar rate dropped 0.1% from the previous week, and the Chinese yuan also fell 0.01%, both strengthening against the dollar. In contrast, the won-dollar rate rose 0.1%, showing weakness.
Market participants assess that the supply-demand imbalance persists as dollar selling (negotiation) volumes from exporters are not coming out sufficiently while domestic investors' steady demand for currency exchange continues, and this trend is acting as upward pressure on the won-dollar exchange rate.
"Rather than pointing to specific entities such as pension funds, Korean retail investors in U.S. stocks, or corporations, the structure of overall high dollar demand is persisting, and with expectations added that this trend will not reverse for the time being, the momentum of betting on won weakness is growing," a foreign exchange market expert said.
Meanwhile, Kim Yong-beom, Senior Secretary to the President for Policy, stated at a press briefing on the first six months of the Lee Jae-myung government's achievements the previous day, "There are movements betting on won weakness, but let me say clearly that we have measures to respond appropriately to that."
