Won-Dollar Exchange Rate Jumps 14 Won... FX Market Tense Ahead of FOMC (Updated)

Rose 14.0 won from the previous closing rate to 1,337.7 won
Fed increasingly likely to opt for a hawkish hold
Foreign investors' forward exchange hedging also a factor

The won-dollar exchange rate jumped by as much as 14 won on Oct. 28. Some observers say the exchange rate was affected by the increased likelihood that the Federal Reserve will opt for a "hawkish hold" ahead of a meeting of its Federal Open Market Committee (FOMC).

As of 3:30 p.m. on Oct. 28, the won-dollar exchange rate stood at 1,337.7 won, up 14.0 won from the previous trading day's closing rate.

The rate was in the 1,326-won range at 9 a.m. before rising sharply during the morning to 1,339.1 won at 11:36 a.m. It then steadied before climbing to 1,342.3 won at 1:45 p.m. The rate subsequently fell to 1,336.3 won at 3:21 p.m., but turned upward again.

Markets see the FOMC meeting, whose results are due early on Oct. 29 Korea time, as a major factor behind the rise in the won-dollar exchange rate.

This is because the Fed is expected to deliver a hawkish message even if it holds interest rates steady this month, given the inflation situation in the United States.

Accordingly, the dollar index, which measures the dollar's value against the currencies of six major countries, rose 0.332 to 102.431.

High oil prices are also a concern. West Texas Intermediate (WTI) crude rose back above $100 a barrel, reaching $101.55.

Some also say that foreign investors' net purchases of KRW 815.8 billion worth of shares on the KOSPI market put upward pressure on the exchange rate. The view is that foreign investors exchanged dollars for won to invest in the Korean stock market and bought forward contracts to hedge their positions, pushing the exchange rate higher.

In overnight trading in the non-deliverable forward (NDF) market, the one-month won-dollar rate was last quoted at 1,326.2/1,326.6 won, up 3.7 won from the previous session's spot closing rate.

The won-yen cross rate rose 8.41 won to 847.04 won per 100 yen. The yen-dollar exchange rate rose 0.16 yen to 157.97 yen.

However, the rise in the won-dollar exchange rate is not expected to develop into a sustained uptrend.

"The FOMC outcome tomorrow will affect the exchange rate, but semiconductor companies are selling a huge amount of dollars," said Park Sang-hyeon, an economist at iM Securities. "In particular, once Samsung Electronics announces its shareholder return policy following SK hynix, more dollars will continue to be exchanged, so I don't think the won-dollar exchange rate will be able to rise on a sustained basis."

The KOSPI and KOSDAQ indexes and the won-dollar exchange rate are displayed on screens at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Oct. 28, as the KOSPI continued its rally after surpassing the 5,960 mark intraday. Oct. 28, 2026. Photo by Cho Yongjun.

This content was produced with the assistance of AI translation services.