Rate hits 1,556.55 won at 9:54 a.m.
Yen-dollar rate also surpasses 162 yen
The won-dollar exchange rate surged past 1,550 won from the opening bell Tuesday, extending its run at elevated levels. Selling pressure from exporters and caution from currency authorities briefly pushed the rate back to the 1,547-won range, but the moves were not enough to reverse the won's weakness.
The won opened at 1,549.8 won per dollar on the Seoul foreign exchange market Tuesday, up 0.4 won from the previous session — its highest level in about a month since June 8, when it stood at 1,555.2 won. The rate advanced to 1,553.0 won immediately after the open before pulling back to 1,547.25 won around 9:13 a.m. The currency swung more than 5 won in just over 10 minutes, signaling high volatility from the outset. It subsequently climbed back to 1,556 won by 9:47 a.m.
In global currency markets, the dollar strengthened on solid US employment data and yen weakness. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.14 from the previous day to 101.27 at the same time. The US Job Openings and Labor Turnover Survey for May showed 7.594 million job openings — a two-year high — though hiring fell from the prior month.
"The Chicago Fed manufacturing index and the Dallas Fed services purchasing managers index also beat market expectations, reinforcing optimism about the US economy," said Min Gyeong-won and Im Hwan-yeol, economists at Woori Bank. "Expectations for a Federal Reserve rate hike in September, which had fallen to around 70 percent, have risen back to 85 percent, and US government bond yields have also moved higher." The stronger economic data rekindled rate-hike expectations and lent support to the dollar, they added.
Tuesday's advance is largely attributed to a combination of real dollar demand tied to end-of-half-year repatriation of foreign investor funds and the impact of yen weakness. The yen-dollar rate has reached its highest level in roughly 40 years, surpassing 162.7 yen per dollar. The rate climbed above 162 yen on Monday, its highest since December 1986 — just after the Plaza Accord — when it traded in the 158-to-163-yen range.
"With the yen weakening into the 162-yen range, the won-dollar rate faces upward pressure given the won's tendency to track the yen as a proxy currency," said Lee Min-hyeok, an economist at KB Kookmin Bank. "However, strong vigilance over potential government intervention is likely to limit any further significant advance."
forest@heraldcorp.com
