As the US consumer price index exceeded market expectations, the won-dollar exchange rate again surpassed the previous record high from the beginning of the market due to the possibility of a ‘jumbo step’ (interest rate hikes by 0.5% at least twice) due to inflation concerns.
On the 12th, in the Seoul foreign exchange market, the won-dollar exchange rate was trading at 1282.9 won, up 7.7 won from the previous trading day (1275.3 won) as of 9:03 am. On this day, the exchange rate opened at 1282.5 won, up 7.2 won from the previous trading day. It showed an upward trend from the beginning of the market and climbed to 1283.0 won, breaking the intra-day high (1280.2 won) recorded the previous day again. It is a record-breaking record for five consecutive trading days. This is the highest level in two years and two months since March 19, 2020 (1296.0 won) on an intraday basis.
The Dollar Index (DXY), which indicates the value of the dollar against the currencies of six major countries, recorded 104.020, up 0.07% from the battlefield on the 11th (local time). It is the first time in 19 years and 5 months since December 23, 2002 (104.080) that the dollar index crossed 104 as of the close of the market.
Investors paid attention to the US Consumer Price Index (CPI) released last night.
Last night, the U.S. Department of Labor reported that the U.S. consumer price index rose 8.3% year-over-year in April. It was in the 8% range for the second month in a row, exceeding the estimate compiled by the Wall Street Journal (WSJ) of 8.1%. The increase was 0.2 percentage points lower than in March (8.5%), which was the highest in 40 years. Core prices, excluding food and energy, also rose 6.3% YoY, beating our estimate of 6.0%. Expectations for an inflation peak out (peak) have somewhat weakened as it surpassed market expectations.
Atlanta Federal Reserve Bank President Rafael Bostic said in an interview shortly after the release of the inflation data that the possibility of a higher rate hike remains open if inflationary pressures do not subside. This raises the prospect that the US Federal Reserve (Fed) will enter into a steeper tightening.
In addition to the weakening of risk preference following the sharp decline in the US stock market, the possibility of negative effects on the won, a risky currency, has increased. Evaporation of global market capitalization also appears to lead to increased demand for dollars from securities firms to pay margins.
International oil prices, which fell below $100 per barrel due to concerns about sluggish demand in China, also crossed the $100 mark again. On the 11th (local time) on the New York Mercantile Exchange (NYMEX), the price of West Texas Intermediate (WTI) crude for June was traded at 105.75, up 6% from the previous day. On the London ICE Futures Exchange, the July Brent futures price was also up 5.05% from the previous trading day at $107.63 a barrel.
At the New York Stock Exchange (NYSE) on the 11th (local time), the three major indices, the Dow, the S&P 500, and the Nasdaq, showed mixed results.
The Dow Jones Industrial Average closed at 31,834.11, down 326.63 points (1.02%) from the previous day. The large-cap S&P 500 index fell 65.87 points (1.65%) to 3935.18, and the Nasdaq index, which focused on technology stocks, closed down 373.44 points (3.18%) to 11,364.24.
In the bond market on the same day, the yield on the 10-year US Treasury bond fell 2.15% to 2.925% from the previous market. The two-year bond yield, which is sensitive to monetary policy, stood at 2.647%, up 1.58% from the previous one.
Min Kyung-won, a researcher at Woori Bank, said, “The exchange rate is expected to rise today due to the re-emergence of concerns about the Fed’s jumbo step due to continued inflationary pressure and the impact of a plunge in risky assets.” It was not enough to meet the peak-out expectations of the company, so I think they will try to break through 1280 won.”
[서울=뉴시스]
