Won breaches 1,460 per dollar on "Warsh shock"...US Dollar–South Korean Won jumps 24.8 won

The US Dollar–South Korean Won exchange rate surged by nearly 20 won during intraday trading on the 2nd, breaking through the 1,460-won level. In the Seoul foreign exchange market, the won closed at 1,464.3 per dollar, up 24.8 won from the previous session.
The rate opened at 1,451 won, 11.5 won higher than the previous close, and extended its gains during the session as weakness in the domestic stock market coincided with large-scale net selling of Korean equities by foreign investors. The Korea Composite Stock Price Index (KOSPI) and the KOSDAQ Index both fell more than 5%, and at around 12:31 p.m., a sidecar was triggered for five minutes after a sharp drop in KOSPI 200 Index Futures prompted a temporary suspension of program buy orders.
The main driver behind the sharp rise in the US Dollar–South Korean Won exchange rate is the hawkish stance of Kevin Warsh, a former Governor of the Board of Governors of the Federal Reserve System, who has been nominated as the next chair of the Federal Reserve System (Fed). When Warsh resigned from the Fed board in 2011, he publicly opposed quantitative easing and argued that artificially lowering interest rates distorts market functioning. Following his nomination, markets scaled back expectations for cuts to the federal funds rate, and the dollar has remained strong.
In addition, the U.S. Producer Price Index (PPI) for December rose 0.5% from the previous month, beating the forecast of 0.3%, which also supported the dollar’s strength.
Yu Jeong Lee, a researcher at Hana Bank, said, "The market interpreted former Governor Warsh’s stance favoring balance-sheet reduction as a hawkish signal, which immediately translated into dollar strength," adding, "With recent U.S. wholesale prices exceeding expectations, concerns about a rekindling of inflation are also growing."
Experts noted, "Following Warsh’s nomination, the strong dollar and weak won are likely to persist in the short term," and stressed, "Close monitoring of the foreign exchange market is needed to prepare for heightened exchange-rate volatility."

imne@fnnews.com Hong Ye-ji Reporter