Here’s this week’s forecast for the Korean won-US dollar exchange rate from Hana Bank.
The weekly forecast is neither a guarantee nor a promise of accuracy and is intended to give our readers information on the forecasted foreign exchange rate from the bank each week.
Check out the most up-to-date foreign currency exchange rates for over 40 currencies here.
Trading range: 1,250 – 1,280 KRW per 1 USD
This week’s forecast:
This week, the KRW-USD exchange rate is expected to rise, fueled by market expectations ahead of the FOMC meetings on the 3rd and 4th of May. But the rate’s move is likely to be limited after the meetings, wherein the predictions will be tested in light of the Fed’s upcoming interest hikes and reduction of the balance sheet, along with a possible 50bp hike in the benchmark interest rate.
Also, odds are rising that the Fed will become more aggressive and raise interest rates by 75 basis points following the upcoming meetings in June and July. In this context, if traders cannot secure a clear picture of its tightening schedule, the rate may raise its ceiling after a temporary drop.
Last week’s trend:
The Korean won-US dollar (KRW-USD) exchange rate opened the week up as the greenback strengthened, influenced by Fed Chairman Jerome Powell’s hawkish comments. Coupled with increased foreign net-selling in Asian stock markets, including KOSPI, the weakening Chinese yuan pushed the rate even higher.
At mid-week, when investors flocked to safer assets amid growing concerns over China’s lagging economy ensued after more shutdowns in its major cities, the exchange rate continued its upward trend. The weakened euro attributable to Russia’s cut of gas supply to Poland and Romania was another contributor to this trend.
Later in the week, amid the euro’s strengthening with an upward tendency, sparked by a possible interest hike by the ECB in 3Q, worries over the Fed’s imminent tapering measures were abated when an announcement came out that US gross domestic product (GDP) made a surprising 1.4% drop during 1Q. As a result, the recent rise in the KRW-USD exchange rate was curbed temporarily, leading to a fall by a great margin.
Disclaimer: Neither Hana Bank nor Haps Korea shall accept any liability for any damage or loss, including but not limited to profit or loss, that may arise either directly or indirectly from use of this information.