(Seoul=Yonhap Infomax) The dollar-won exchange rate is expected to open lower in the mid-1,460 won range on the 26th.


Market attention is focused on a press briefing scheduled for 10:00 AM KST, where Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol will address recent developments in the foreign exchange market and the broader economy.


The meeting is anticipated to provide explanations on FX market issues and deliver a message regarding exchange rate stabilization. With the dollar-won rate remaining elevated, the head of the FX authorities has urgently arranged this event, signaling a direct response to market volatility.


Even the announcement of the Deputy Prime Minister’s appearance has heightened caution among market participants. The dollar-won rate slipped to 1,464.50 in the London session, reflecting news of the upcoming briefing after the previous day’s close.


Following recent coordination among the Ministry of Economy and Finance, Bank of Korea, Ministry of Health and Welfare, and National Pension Service—one of the largest players in the FX market—the Deputy Prime Minister’s move has further intensified market vigilance.


As the market awaits the press briefing, volatility is expected to increase. This is effectively a pre-announced verbal intervention, and the strength of the message will likely determine the dollar-won’s direction.


Given the high level of attention, a lack of concrete stabilization measures could disappoint the market and push the dollar-won higher. However, authorities are likely well-prepared to avoid such a scenario, making a strong warning and intervention message probable.


Meanwhile, global dollar weakness is also exerting downward pressure on the dollar-won rate. Overnight, the dollar declined on rising hopes for a Russia-Ukraine peace agreement and growing expectations of a US Federal Reserve rate cut.


ABC News reported that the Ukrainian delegation had reached an agreement with the US on potential peace terms, while former President Donald Trump posted on Truth Social that “tremendous progress” had been made toward ending the Russia-Ukraine war.


While caution remains due to previous failed mediation efforts, weak US economic data and increased prospects for Fed rate cuts are weighing on the dollar-won.


ADP reported that US private employment fell by an average of 13,500 per week over the past four weeks, and September retail sales rose just 0.2% month-on-month, missing expectations.


The Conference Board’s November consumer confidence index dropped 6.8 points from the previous month to 88.7, the lowest since April and below market forecasts.


Additionally, reports suggest Kevin Hassett, White House National Economic Council (NEC) member and a noted dove among candidates, is a leading contender for the next Fed chair, raising expectations for accelerated rate cuts.


Meanwhile, “super-dove” Fed Governor Steve Myron reiterated the need for significant rate cuts, citing rising unemployment.


According to CME FedWatch, the federal funds futures market is pricing in an 84.8% probability of a 25bp rate cut by the Fed in December.


This dovish sentiment is expected to further pressure the dollar-won lower.


With the month-end approaching and the dollar-won seen as having reached a short-term peak, exporter FX conversion and foreign investor stock purchases could widen the pair’s decline.


Overnight, major US equity indices all rose: the Dow Jones Industrial Average gained 1.43%, the S&P 500 climbed 0.91%, and the Nasdaq Composite advanced 0.67%.


However, the downside for the dollar-won may be limited, as importers and overseas investors could view the drop as a buying opportunity, leading to increased settlement and FX demand.


Today, the Fed will release its Beige Book economic assessment, and US September durable goods orders will be announced.


In overnight trading ending at 02:00 KST, the dollar-won closed at 1,469.30, down 3.10 won from the regular session close.


In the New York non-deliverable forward (NDF) market, the one-month dollar-won contract was last quoted at 1,463.40 (mid).


Taking into account the recent one-month swap point of -2.35 won, this represents a 6.65 won decline from the previous Seoul spot market close of 1,472.40 won.


(Market Team, Economics Department)


ywshin@yna.co.kr


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