Dollar rally reignites as won-dollar rate returns to the 1,450 range

According to The Financial News, the won-dollar exchange rate jumped more than 10 won in early trading on the 2nd, as expectations for a United States of America (US) policy rate cut weakened.
In the Seoul foreign exchange market that day, the Korean won opened at 1,451.0 per US dollar, up 11.5 won from the previous session, and has been moving around a similar level since the open.
Recently, financial markets have seen heightened volatility after Kevin Warsh, a former member of the Federal Reserve System (the Fed) Board, was nominated as the next Fed chair. As the dollar has strengthened, prices of risk assets such as gold, Silver and Bitcoin (BTC) have plunged.
In particular, Warsh’s hawkish stance, favoring monetary tightening, has come into focus, dampening expectations for a US policy rate cut. This shift has helped sustain the strong-dollar trend.
In addition, the U.S. Producer Price Index (PPI) for December rose 0.5% from the previous month, beating the market forecast of 0.3% and lending further support to dollar strength.
The U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, closed at 97.173, up 0.05% from the previous day. DXY had fallen to an intraday low of 95.506 on the 27th of last month but has since rebounded quickly.
Yu Jeong Lee, a researcher at Hana Bank, explained, "The balance-sheet reduction stance that Warsh has long advocated is being interpreted by the market as a hawkish signal, and this perception is translating directly into dollar strength." Lee added, "Recently, US wholesale prices have exceeded expectations, stoking renewed concerns about a resurgence of inflation."

imne@fnnews.com Hong Ye-ji Reporter