USD-KRW exchange rate closes at 1,445.6 KRW... gains narrowed due to weak US manufacturing data

The South Korean won against the US dollar closed slightly higher in the early morning (Korea time) on the 6th in the US foreign exchange market. Due to US manufacturing indicators falling short of expectations, the US dollar shifted from a strong start to a weaker tone, and the won’s value also showed a certain degree of recovery.

On that day, in the New York foreign exchange market, the won against the dollar ended trading at 1 USD = 1445.60 KRW. This is an increase of 3.80 KRW from the Seoul foreign exchange market closing price of 1441.80 KRW. The day’s fluctuation range was between 1442.70 KRW and 1449.60 KRW, with a total price movement of 6.90 KRW.

The exchange rate initially rose in response to hawkish (tightening) comments from senior Federal Reserve officials. Particularly, Minneapolis Fed President Neel Kashkari’s assessment that “the US economy shows a stronger-than-expected resilience in recovery, and the benchmark interest rate is approaching a neutral level” made the market realize the possibility of further rate hikes.

However, the turning point came with the US manufacturing indicators. The December Manufacturing Purchasing Managers’ Index (PMI) released by the Institute for Supply Management (ISM) was only 47.9. This not only fell short of the market expectation of 48.3 but also was lower than the previous month’s figure, indicating that manufacturing activity remains in contraction territory. Typically, a PMI above 50 indicates economic expansion, while below 50 indicates contraction.

After the weak US indicators, the US dollar weakened against major currencies such as the euro and yen, and the won against the dollar also retreated from its high point. On the other hand, Mark Chandler, Chief Strategist at Bannockburn Global Forex, analyzed that although the dollar is currently showing weakness, it has bottomed out in December last year. Before the employment indicators to be released on the 9th, the dollar may face renewed upward pressure.

Recently, the foreign exchange market tends to be sensitive to fluctuations based on US economic uncertainty and the Federal Reserve’s monetary policy direction. Especially, changes in the dollar’s value triggered by core economic indicators such as employment, inflation, and consumption trends are very likely to directly influence the won exchange rate. This trend also suggests that future exchange rates may continue to show significant volatility depending on the US economic indicator release schedule.