A clerk sorts USD 100 banknotes at the headquarters of Hana Bank in Seoul, South Korea. Photo by YONHAP / EPA
Aug. 10 (Asia Today) — South Korea’s won has strengthened by nearly 140 won against the U.S. dollar in little more than a month, reversing fears that the exchange rate could approach 1,600 and raising the prospect of a return to the 1,300-won range.
The won closed at 1,418.4 per dollar at 3:30 p.m. Sunday, down nearly 140 won from an intraday level of 1,555.8 on July 2.
The reversal has been driven by expectations of increased dollar supply associated with SK hynix’s U.S. depositary receipt listing, easing foreign investor portfolio rebalancing, strong semiconductor exports and record current-account surpluses.
Expectations surrounding SK hynix emerged as a major turning point after its U.S. depositary receipts were listed July 10.
The chipmaker raised about $26.5 billion through the listing, prompting expectations that some of the proceeds would flow into South Korea and be converted into won.
Dollar sales by South Korean exporters have added to the shift in supply and demand in the foreign exchange market.
Another factor has been the easing of portfolio rebalancing by foreign investors.
As South Korean stocks rose sharply during the first half of the year, foreign investors reduced their Korean equity exposure and converted won proceeds into dollars, putting upward pressure on the exchange rate. That activity has recently weakened.
South Korea’s external accounts have also supported the won.
The country’s current-account surplus reached a record $49.73 billion in June, following the previous record of $38.61 billion in May, according to the Bank of Korea.
Strong semiconductor exports driven by expanding AI investment have substantially increased dollar inflows into South Korea.
The next major test for the exchange rate will be the U.S. consumer price index for July, scheduled for release Wednesday.
With recent U.S. employment data weakening expectations for a September interest-rate increase, inflation figures in line with market forecasts could reinforce expectations that the Federal Reserve will keep rates unchanged, potentially putting additional downward pressure on the dollar.
“If July U.S. consumer inflation is in line with market expectations, expectations for the Federal Open Market Committee to keep rates unchanged in September will gain further momentum,” said Park Sang-hyun, a researcher at iM Securities. “That could create additional downward pressure on the dollar.”
Park said the CPI report could determine whether the won breaks into the 1,300 range against the dollar.
Even if it does, he said, the exchange rate is more likely to fluctuate around 1,400 in the near term rather than continue falling sharply.
— Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260810010003168
