Dollar-Won Exchange Rate Declines Slightly Amid Federal Reserve's Interest Rate Speculation

SEOUL - The dollar-to-won exchange rate edged lower during overnight trading, inching closer to the 1,390 won mark. This decline came as dovish remarks from a key Federal Reserve official fueled expectations of an interest rate cut at the U.S. central bank's upcoming meeting, placing pressure on the U.S. dollar.

At 2:00 a.m. Korean Standard Time on the 19th, the dollar-won exchange rate closed at 1,391.60 won, marking a 1.00 won decrease from the previous day's closing price on the Seoul foreign exchange market. Compared to the intraday high of 1,393.00 won recorded earlier this week, the rate declined by 1.40 won.

The rate showed a steady downward movement during New York trading hours, dipping to an intraday low of 1,386.90 won. This shift followed comments by Federal Reserve Governor Christopher Waller, who has been an outspoken proponent of an interest rate cut ahead of the Federal Open Market Committee's (FOMC) two-day meeting later this month.

Governor Waller, addressing concerns in an interview about postponing monetary policy changes until September, said, "Why should we wait until September? It’s merely six weeks, which isn't a significant delay." He also pointed out challenges in the private sector, noting, "Private sector performance has fallen short of expectations. Fifty percent of last month’s job growth came from the public sector, signaling that the private sector is not performing strongly."

Considered a pivotal voice within the Federal Reserve, Waller reiterated earlier in a morning speech that monetary easing should be implemented during the FOMC’s upcoming session. This policy meeting is set to take place from July 29–30.

In reaction to Waller's dovish remarks, the U.S. Dollar Index—an indicator that measures the greenback's value against six major world currencies—temporarily dipped to the 98.1 range. However, it later recovered to settle near 98.4 as global markets digested the remarks.

Economic data released overnight presented mixed indicators about the health of the U.S. economy. According to the University of Michigan, July's preliminary consumer sentiment index rose to 61.8, up from June's finalized figure of 60.7. This marked a five-month high. Joanne Hsu, the lead analyst of the Michigan Index, commented, "Consumers are still very conscious of uncertainties surrounding the broader economy. However, the recent rise in sentiment suggests that fears over worst-case tariff-related scenarios have eased compared to earlier this year."

In other currency markets as of 2:50 a.m., the dollar-yen exchange rate stood at 148.750 yen, while the euro-dollar exchange rate traded at 1.16240 dollars. Meanwhile, the offshore dollar-yuan exchange rate was around 7.1785 yuan. Cross-currency movements showed the yen-won exchange rate at 936.40 won per 100 yen and the yuan-won rate at 193.64 won.

The dollar-won trading range on the day recorded a high of 1,394.50 won and a low of 1,386.90 won, resulting in a total fluctuation of 7.60 won. Combined trading volumes during overnight trading, processed via both the Seoul Foreign Exchange Brokerage and Korea Money Brokerage, amounted to $14.985 billion.

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sjkim@yna.co.kr