An electronic board at the Hana Bank headquarters in central Seoul shows the value of the Korean won per dollar quoted at 1,400 during intraday trading, Friday. (Yonhap)
An electronic board at the Hana Bank headquarters in central Seoul shows the value of the Korean won per dollar quoted at 1,400 during intraday trading, Friday. (Yonhap)

The value of the Korean won weakened past the 1,400 mark against the US dollar during intraday trading on Friday for the first time in three weeks, pricing in lowered expectations for the US Federal Reserve to issue a rate cut.

The local currency per dollar opened at 1,400 on Friday, weakening 1.6 won from the previous session. After peaking at 1,400.5 during intraday trading, the won regained strength and closed daytime trading at 1,393.2 per dollar.

The Korean won was extending losses from the previous trading session, having sharply depreciated to 1,403.6 per dollar during overnight trading.

It was the first time for the won-dollar exchange rate to breach the 1,400 level during daytime trading in nearly 20 days, since hitting 1,401.4 on Aug. 1.

The dollar’s strength has intensified as risk aversion strengthened across investors ahead of the US Federal Reserve’s annual Jackson Hole symposium in Wyoming, bolstered by a stronger-than-expected Purchasing Managers' Index from the US — a gauge of the health of the manufacturing and services sectors in the country.

“The dollar index retraced the previous week’s losses as the US-Russia summit did not yield tangible progress and markets awaited further developments in ceasefire negotiations," said Lee Jin-kyung, an analyst from Shinhan Securities.

"Continued foreign net selling on the Kospi also put pressure on the won,” Lee said, referring to how offshore investors dumped shares worth 452 billion won ($324 million) on the local stock market this month, ending a three-month buying spree.

With diminished expectations for a Federal Reserve rate cut, the Korean won is likely to remain weak against the dollar, analysts view.

"The rise in the dollar index, corrections in the Nasdaq and increased risk aversion among investors are expected to weigh on the won,“ according to Lee Min-hyuk, a researcher at KB Kookmin Bank.

"The market remains cautious about US inflationary pressures and continues to stay unconvinced about a Fed rate cut."


silverstar@heraldcorp.com