Won falls to 1,430s despite hawkish Fed hold; SK Hynix ADR demand cited

The won-dollar exchange rate fell to the 1,430 won range Thursday even as long-term US Treasury yields surged following a hawkish interest rate hold by the Federal Reserve.

As of 10:50 a.m., the won was trading at 1,447.4 won per dollar on the Seoul foreign exchange market. The rate touched an intraday low of 1,435.9 won around 9:16 a.m. before gradually climbing back. On an intraday basis, that marked the won's weakest level in about five months, since Feb. 27 (1,430.5 won) — just before the outbreak of the Iran war.

Early Thursday, the Federal Open Market Committee held its benchmark interest rate steady at an annual 3.50–3.75 percent. Three committee members voted against the decision, calling for a rate increase, signaling a more hawkish tone than at the previous meeting.

As inflation concerns spread, the yield on the 30-year US Treasury bond rose 0.11 percentage points to 5.21 percent shortly after the New York stock market closed — its highest level in 19 years, since July 2007, just before the global financial crisis.

Rising long-term US Treasury yields typically strengthen demand for the dollar, putting upward pressure on the won-dollar rate. The won strengthened anyway, with analysts attributing the move to won-conversion demand — driven in part by SK Hynix's issuance of American depositary receipts — outweighing dollar-preference sentiment by an even wider margin.

The dollar index, which measures the greenback against six major currencies, edged up 0.078 to 100.890, holding above the 100 level.

The yen weakened 0.141 to 163.482 per dollar. The won-yen cross rate dipped to the 870 won per 100 yen range during trading before recovering to the 880 range.