Experts cited the US Federal Reserve’s Federal Open Market Committee (FOMC) next month as the background to the strong won/dollar exchange rate, China risk, and international oil price volatility.
◇ Kim Yu-mi, researcher at Kiwoom Securities = Despite the IMF’s downward revision to this year’s US growth forecast, the dollar rose on expectations that it would announce a tapering in November due to upward revisions to inflation forecasts and hawkish remarks from Fed members.
The International Monetary Fund (IMF) lowered the US economic growth rate to 6.0% this year by 1.0%p from the previous year (July). However, expectations of a tapering announcement at the FOMC in November rose as Clarida Fed Vice Chairman Clarida’s Fed Vice Chairman said the tapering conditions were nearly met amid heightened concerns over inflation.
This, along with rising US short-term Treasury yields, acted as a bullish factor for the dollar.
The one-month New York NDF is expected to start dropping by 1 won to 1,198.84 won.
◇ Park Sang-hyeon, researcher at Hi Investment & Securities = While the triple weakness of domestic stocks, bond prices and the won continues, the won/dollar exchange rate is threatening 1,200 won for the first time in 15 months since the pandemic last year.
Based on the previous day’s closing price, the won/dollar exchange rate is the highest in one year and three months since 1201.5 won on July 24 last year. The reason behind the domestic triple weakness and the KRW/USD rate reaching KRW 1,200 is that the uncertainty of existing negative factors is expanding rather than resolved.
For example, as the Chinese government has not announced any measures against the liquidity crisis related to the Hengda Group, anxiety about the liquidity crisis is growing.
The domestic economic cycle does not appear to have entered a downward trend. Accordingly, we believe there is still a difference in economic fundamentals from the previous period when it exceeded W1,200. The variables are China risk and oil price stabilization.
