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(Seoul=Yonhap Infomax) Seon Mi Jeong – Dealers in Seoul’s foreign exchange market expect the dollar-won exchange rate to open lower around the 1,470 won level on the 24th.
Market sentiment for a December rate cut by the US Federal Reserve (Fed) has strengthened after John Williams, President of the Federal Reserve Bank of New York, signaled the possibility of a policy adjustment in December.
Meanwhile, a Bank of Japan (BOJ) policy board member left the door open for a future rate hike, providing support for the yen and curbing its recent weakness.
Efforts to broker a ceasefire in the Russia-Ukraine war are also seen as factors that could push the exchange rate lower.
With risk aversion easing, dealers anticipate the dollar-won rate could test the 1,460 won range.
After the market closes today, Morgan Stanley Capital International (MSCI) will rebalance its indices. HD Hyundai Marine Solution Co. and APR Corp. will be newly included, while Orion Corp. will be removed.
Some dealers expect the exchange rate to remain relatively stable ahead of this week’s Monetary Policy Board meeting at the Bank of Korea.
In the New York non-deliverable forward (NDF) market, the one-month dollar-won contract was quoted at 1,467.80 won (mid) on the night of the 21st.
Taking into account the recent one-month swap point of -2.20 won, this is 5.60 won lower than the previous Seoul spot market closing price of 1,475.60 won.
The expected trading range for the day is projected at 1,464 to 1,473 won.
• Dealer at Bank A
“We expect a lower opening near 1,470 won. The pressure for a stronger dollar has eased as expectations for a Fed rate cut have recovered, and the yen is attempting to strengthen on hawkish comments from BOJ board members. The won, moving in tandem with the dollar and yen, is likely to see its recent weakness subside somewhat. If risk appetite continues to recover, the rate could enter the 1,460 won range.”
Expected range: 1,464.00–1,473.00 won
• Dealer at Securities Firm B
“With expectations for a US rate cut, the upside for the dollar-won pair appears limited, making it difficult to rise above 1,470 won. Also, ahead of the Monetary Policy Board meeting, authorities are unlikely to stoke exchange rate volatility, so we may have already seen the short-term peak.”
Expected range: 1,465.00–1,472.00 won
• Dealer at Bank C
“If President Williams’ dovish remarks, hopes for a Russia-Ukraine ceasefire, and expectations for a BOJ rate hike further weaken the dollar index in Asian trading, the dollar-won pair will face additional downward pressure. With the MSCI index rebalancing scheduled, there is talk of potential outflows from Korean assets, which could prompt foreign selling. From the mid-1,460 won range, dollar buying is expected to be solid.”
Expected range: 1,464.00–1,472.00 won
smjeong@yna.co.kr
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