Dollar-Won Exchange Rate Drops Below 1,410 Won After U.S. Inflation Data Release

U.S. Inflation Data Triggers Dollar-Won Rate Decline

The dollar-won exchange rate experienced a notable decline after the release of U.S. inflation data, closing just below the 1,410 won threshold. Market analysts attribute this movement to mounting expectations of a Federal Reserve interest rate cut in the near term.

By 2 a.m. KST on the 27th, the dollar-won rate closed at 1,409.70 won, an increase of 9.10 won from the last trading session in Seoul's foreign exchange market. However, when compared to the prior week's closing value of 1,412.40 won, the rate reflected a net decrease of 2.70 won. The downward pressure on the exchange rate emerged during the New York trading session, influenced by the release of Personal Consumption Expenditure (PCE) data in the U.S.

U.S. Core Inflation Data Aligns with Predictions

According to the U.S. Commerce Department, the PCE price index for August rose by 0.3% on a month-over-month basis and 2.7% year-over-year. The core PCE index, excluding the volatile food and energy sectors and considered the Federal Reserve’s preferred measure of inflation, climbed 0.2% from the previous month and 2.9% annually. These figures matched market expectations, tempering the dollar's recent strength.

In response, the U.S. Dollar Index—a benchmark measuring the dollar against a basket of other major currencies—fell to 98.162 during the session. Correspondingly, the dollar-won rate dropped to an intraday low of 1,409.00 won.

Analysts Weigh Federal Reserve Implications

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, remarked, “Although inflation continues to linger, it doesn’t seem substantial enough to deter the Federal Reserve from potentially enacting a rate cut before the end of the year.” Echoing this sentiment, John Velis, a foreign exchange strategist at Bank of New York Mellon (BNY), commented, “In the immediate future, the dollar is likely to fluctuate in response to evolving expectations regarding Federal Reserve policy actions.”

Intraday Activity and Trading Volume

Throughout the trading session, the dollar-won exchange rate oscillated between a low of 1,408.30 won and a high of 1,414.00 won, representing a narrow intraday spread of 5.70 won. Factoring in overnight trading, the total spot foreign exchange trading volume reached $14.077 billion, reflecting sustained market interest in the pair.

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Movements in Other Key Currency Pairs

Significant activity was also recorded in other major currency pairs:

• The dollar-yen exchange rate reached 149.520 yen.
• The euro was valued at $1.16947 against the dollar.
• The offshore dollar-yuan rate stood at 7.1409 yuan.
• The yen-won cross rate closed at 942.65 won per 100 yen.
• The yuan-won rate concluded trading at 197.65 won.

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