The South Korean won closed at its strongest level against the dollar in 13 months. Concentrated dollar selling by exporters ahead of month-end, combined with the Bank of Korea’s hawkish signal from consecutive rate hikes, drove the won’s strength.<\/p>\n
On the 28th, the USD\/KRW exchange rate closed at 1372.5 won in the Seoul Foreign Exchange Market, down 8.4 won from the previous session. This marks the lowest weekly close since July 24 of last year (1367.2 won), a span of approximately one year and one month. Intraday, the pair fell to 1371.8 won around 3 p.m., setting a new yearly low.<\/p>\n
The most direct cause of the day’s decline was month-end negotiation volume. Exporters flooded the market with dollar sell orders to convert their holdings into won ahead of month-end settlements, exerting downward pressure on the exchange rate. Analysts note that the upcoming interim corporate tax payment deadline next week further amplified companies’ need to offload dollars.<\/p>\n
Despite persistent foreign investor net selling in the domestic stock market and caution ahead of the Jackson Hole meeting, negotiation volume overwhelmed these factors.<\/p>\n
The Bank of Korea’s Monetary Policy Board decision the previous day also lent support to the won’s strength. The central bank raised its benchmark rate by 0.25 percentage points, marking its second consecutive tightening move following July’s hike. This narrowed the U.S.-South Korea policy rate differential to 0.75 percentage points. A narrower rate gap enhances the relative attractiveness of won-denominated assets, acting as a downward force on the exchange rate.<\/p>\n
The dollar traded in a narrow range ahead of Federal Reserve Chair Kevin Warsh’s Jackson Hole speech scheduled for that evening. The Dollar Index fluctuated around the 99.1 level without showing a clear directional bias.<\/p>\n
The USD\/KRW exchange rate has now remained in the 1300-won range for eight consecutive trading days since the 19th. With the cumulative decline since the start of the year growing, attention is also turning to the possibility of intervention by South Korean foreign exchange authorities.<\/p>\n
A lower exchange rate can contribute to consumer price stability by reducing import prices, but it negatively impacts exporters’ won-denominated earnings. Market participants are closely watching the dollar’s direction following the Jackson Hole speech and whether the Bank of Korea will pursue additional tightening.<\/p>\n