Dollar-Won Closes at 1,471 Level as Fed Rate Cut Expectations Narrow Gains

(New York=Yonhap Infomax) Jin Woo Choi – The dollar-won exchange rate pared earlier gains in overnight trading, closing at the 1,471 won level as dovish remarks from a senior Federal Reserve official fueled a weaker dollar and stronger won.

At 02:00 KST on the 22nd, the dollar-won rate finished at 1,471.50, up 3.60 won from the previous Seoul close. Compared to the previous session’s closing price of 1,475.60 during regular trading hours (09:00–15:30 KST), the rate fell by 4.10 won.

Entering the New York session around the 1,474 won mark, the dollar-won rate came under downward pressure following comments from John Williams, President of the Federal Reserve Bank of New York. Speaking at the Central Bank of Chile’s centennial conference in Santiago, Williams stated, “I still see the possibility of further adjustments to the federal funds rate target range in the near term to move policy closer to neutral.”

Williams, who serves as Vice Chair of the Federal Open Market Committee (FOMC) and holds a permanent voting seat, sparked a surge in rate cut expectations with his remarks.

According to CME FedWatch, as of 11:55 AM New York time, the federal funds futures market priced in a 69.5% probability of a 25 basis point rate cut by the Fed in December, up more than 30 percentage points from the previous day’s 39.1%.

John Velis, macro strategist at BNY Mellon, commented, “Williams is generally seen as aligned with (Chair Jerome) Powell. If Williams is supportive of a near-term rate cut, it raises expectations that Powell may share the same view.” He added, “This could have a significant impact on FOMC members who remain undecided.”

The dollar-won rate slid to 1,471.50 as dollar weakness was compounded by increased risk appetite. All three major U.S. stock indices were up more than 1%.

As of 02:15, the dollar-yen rate stood at 156.551 yen, while the euro-dollar rate was at 1.15060. The offshore dollar-yuan rate was trading at 7.1057 yuan.

The yen-won cross rate was 939.58 won per 100 yen, and the yuan-won rate was 206.98 won.

During the session, the dollar-won rate reached a high of 1,477.90 and a low of 1,469.10, marking a trading range of 8.80 won.

Total spot FX trading volume, combining Seoul Foreign Exchange Brokerage and Korea Money Brokerage, was tallied at $13.876 billion through overnight trading.

jwchoi@yna.co.kr

(End)