Fed holds rates, so why does the exchange rate keep falling?
At yesterday's FOMC meeting, the Fed held rates steady with hawkish comments, yet risk appetite has actually strengthened, making the won's appreciation even more pronounced.
It seems the market is betting on a soft landing, so the dollar's weakening trend makes sense. That said, some observers note that U.S. Treasury yields are already at elevated levels, suggesting a pullback could occur within the next month.
Personally, if you need to exchange money, I'd say don't wait for it to fall further — just dollar-cost average and you'll feel more at ease. Trying to predict it is a losing game.
5 answers
Yeah, dollar-cost averaging is good, but isn't the current exchange rate what matters?
Well, if it's a hawkish comment, wouldn't dollar strength be right? The risk-appetite talk seems a bit out of nowhere.
I've also regretted missing the timing every time I exchanged currency, but splitting up your buys really does put your mind at ease. Going all in at once wrecks your mental state lol
The Fed's rate freeze was already priced in, and if anything, the dot plot and Powell's remarks should have been read as hawkish—but the market seems to be ignoring that. Whether this is a soft-landing bet or just a crowded trade should become clear within a month. Personally, I think the current strength in the won is overdone, so waiting for an exchange-rate pullback before buying is also a viable approach.
Market's strong today, huh? Tomorrow's anyone's guess lol. It's not something you can predict.