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| gettyimagesbank |
By Anna J. Park
The won-dollar exchange rate exceeded the 1,300 won mark during Friday's trading session amid growing fears over some U.S. Federal Reserve officials' hawkish remarks that a 50-basis-point increase would be needed in next month's FOMC meeting.
With the longer-than-expected global monetary tightening factoring in the trading session, the won-dollar exchange rate was at 1,291.9 won at the start of Friday's session, an 8.7 won increase from the previous day. The rate continued to soar up to 1,302.95 at around 1:25 p.m., Korea time, during Seoul's foreign exchange market, finishing at 1,299.5 won, up by 14.7 won from the previous session.
It is the first time in nearly two months that the won-dollar exchange rate has risen above 1,300 won during a trading session since Dec. 20 last year. Also, the daily increase of the won-dollar exchange rate on Friday was the largest daily gain since last June.
The U.S. Dollar Index (DXY), a measure of the dollar's value relative to a basket of six other foreign currencies, has also been on a rise during the past three days, reaching 104.45 as of 1.35 a.m. in U.S. Eastern Time on Friday. This marks a 0.57 percent jump from the previous day.
Friday's hike is due mainly to hawkish comments made by Cleveland Federal Reserve President Loretta Mester and St. Louis Fed President Jim Bullard, both supporting the idea of a 50-basis-point rate hike at the March FOMC meeting, citing that pressuring down the inflation would take longer than expected.
The strong remarks resulted in Thursday's U.S. stock market fall, with the S&P 500 Index losing by 1.37 percent, the Dow Jones Industrials decreasing by 1.26 percent and the Nasdaq 100 also falling by 1.93 percent.
"A strong dollar and the markets' decrease in risk preference on Friday were attributed to increased uncertainty in global monetary policies, stemmed from the U.S.' high producer prices in January, which did not satisfy market expectations, as well as U.S. Fed officials' hawkish comments," said Kim Seung-hyuk, an economist at NH Futures.
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