Dollar strengthens on 'Trump effect'...Will the exchange rate be around 1,400 won?

[Anchor]
The dollar is strengthening day after day as the so-called "Trump Trade" phenomenon, an investment that predicts the possibility of former President Trump being elected in the U.S. presidential election next month, has emerged.

The won-dollar exchange rate rose to 1,385 won in the Seoul foreign exchange market, raising concerns that it may reach 1,400 won as in April.

Reporter Ryu Hwan-hong reports.

[Reporter]
As the won-dollar exchange rate, which surpassed 1,380 won this week, soared to 1,385 won, a sense of crisis spread in the Seoul foreign exchange market.

The won-dollar exchange rate fell to 1,312 won last month and has since turned upward, and the recent rise has been sharpening.

In the market, the U.S. presidential election variable is considered the biggest rising factor.

The "Trump Trade" phenomenon is spreading as former President Trump, who was behind Vice President Harris, has recently engaged in a close race.

The 'Trump Trade' refers to investments that, if elected, expect future government bond issuance to increase and the value of U.S. interest rates and the dollar to rise accordingly due to tax cuts and fiscal expansion pledges.When the

won-dollar exchange rate rose to 1,385 won, the selling volume, which was recognized as a high point, stopped rising further and fell slightly.

As long as there are variables in the U.S. presidential election, there are many concerns that it could reach 1,400 won, which is the connection point, but there are not a few objections.

This is because there is still a possibility of further rate cuts at the U.S. Federal Reserve's FOMC meeting next month.

[Seo Jeong-hoon / Senior Researcher at Hana Bank: Solid domestic export flows and volumes that are recognized as high points in terms of supply and demand are expected to limit the exchange rate's rise, so if the rate cut is maintained after the upcoming FOMC, will the exchange rate gradually approach the KRW 1,350 level?].]

There are many views that the Korean foreign exchange authorities will not allow the won-dollar exchange rate to enter 1,400 won.

With the monetary policy stance changing 180 degrees from tightening to easing, the rise in the won-dollar exchange rate will serve as a limiting factor for further cuts in the benchmark interest rate in the future.

I'm YTN's Ryu Hwan Hong.