The South Korean won climbed today after the Federal Reserve announced yesterday additional measures to support the struggling US economy and foster growth. The major event allowed higher-yielding currencies to ignore some negative data that came out before.
The Fed announced that it is going to buy $45 billion of Treasuries per month. Together with $40 billion purchases of mortgage-backed securities, the asset purchase program was expanded to $85 billion.
The US central bank did not put a specific date for the end of the program. Instead, it put a conditional threshold:
The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6–1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committeeâs 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.
The Fed’s policy decision was the major theme that influenced the Forex market, overshadowing negative fundamental reports from the United States and Europe and causing gains of riskier currencies.
USD/KRW fell from 1,073.5499 to 1072.1100 and EUR/KRW dropped from 1,403.2500 to 1,400.3500 as of 2:01 GMT today.
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