The USD-KRW exchange rate declined to the 1,490 won area on July 15 following US inflation data that came in significantly below market expectations. At 6am Seoul time on July 15, the USD-KRW rate stood at 1,490.50 won, down 2.50 won from the previous Seoul session close of 1,493.00 won, and down 7.00 won from 1,497.50 won 24 hours earlier. The decline was driven by June US Consumer Price Index (CPI) data showing a 0.4% month-over-month drop, far below the -0.1% forecast. The weaker-than-expected inflation reading triggered a sharp sell-off in the dollar index and US Treasury yields, with the dollar index briefly plunging to 100.58 and the 2-year Treasury yield dropping over 10 basis points instantaneously.
USD-KRW Hits Intraday Low of 1,486.30 Won During Seoul Trading
The USD-KRW exchange rate plunged to an intraday low of 1,486.30 won during early Seoul trading on July 15, marking the lowest level since the May 12 intraday low of 1,474.80 won. The sharp decline was fueled by a combination of dollar index weakness, foreign buying in Korean equities, and large-scale dollar selling by SK Hynix in the spot foreign exchange market starting in the morning session. The exchange rate initially fell sharply in early trading before gradually recovering toward the 1,500 won level during London trading hours. However, the release of US inflation data overnight triggered a renewed plunge in the USD-KRW rate.
US June CPI Falls 0.4% Month-Over-Month, Energy Prices Drop 5.7%
According to the US Department of Labor, the June Consumer Price Index (CPI) fell 0.4% from the previous month, significantly below the market forecast of -0.1%. Energy prices declined 5.7% month-over-month, representing the largest drop since April 2020. The softer-than-expected inflation data caused the US 2-year Treasury yield to drop more than 10 basis points instantly, while the dollar index fell vertically to 100.58 at one point. During New York trading hours, the USD-KRW rate briefly widened its decline below the 1,490 won level on the back of global dollar weakness. US equity markets closed in positive territory as inflation concerns eased, with SK Hynix's ADR surging over 27%. The dollar index later recovered some losses amid ongoing Middle East tensions. West Texas Intermediate (WTI) crude oil for August delivery closed at the $79 per barrel level, up 1.54% from the previous session.
Fed Chair Warsh Reaffirms Inflation Control Tools and Policy Independence
Fed Chair Kevin Warsh stated overnight that "as we review balance sheet policy, I think it is very important for the Fed to clearly draw a line between itself and fiscal policy." Warsh added that "the Fed can achieve price stability" and "we have policy tools in the form of interest rates and balance sheet policy, and these can help us achieve that goal." The dollar index stood at 100.924, down 0.012 points from the previous day. The USD-JPY rate was at 162.156 yen, up 0.051 yen, while the EUR-USD rate was at 1.14186 dollars, up 0.00023 dollars. The offshore USD-CNH rate rose to 6.7689 yuan.
FAQ
Q: Why did the USD-KRW exchange rate fall to the 1,490 won area on July 15?
A: The USD-KRW rate declined to 1,490.50 won at 6am Seoul time on July 15, down 2.50 won from the previous close, primarily due to US June CPI data showing a 0.4% month-over-month decline versus the -0.1% market forecast. The weaker-than-expected inflation reading triggered sharp dollar selling globally, with the dollar index briefly falling to 100.58.
Q: What was the lowest intraday level reached by USD-KRW during Seoul trading on July 15?
A: The USD-KRW exchange rate hit an intraday low of 1,486.30 won during early Seoul trading on July 15, marking the lowest level since the May 12 intraday low of 1,474.80 won. The decline was driven by dollar index weakness, foreign equity buying, and large-scale dollar selling by SK Hynix in the spot market.
