Won-Dollar Rate Falls to 1,340 Range for First Time in Nearly Two Years as Chip Exporters Sell Dollars

The won-dollar exchange rate has fallen into the 1,340-won range for the first time in nearly two years, driven largely by dollar selling from semiconductor exporters. The rate closed at 1,340.5 won in daytime trading on the Seoul foreign exchange market on the 7th, down 9.9 won from the previous session.

It marked the first daytime closing in the 1,340 range since October 11, 2024, when the rate stood at 1,349.5 won. It was also the lowest closing rate since October 4, 2024, when it reached 1,333.7 won. Compared with this year’s high of 1,559.2 won during trading on July 1, the exchange rate has dropped by more than 200 won in two months.

The rate opened at 1,347.8 won, down 2.6 won from the previous session, before extending its decline. It briefly fell into the 1,330 range during the day. Analysts attributed the movement to dollar sales by exporters, particularly semiconductor companies. Dollar inflows linked to SK Hynix’s American depositary receipts in July, along with expectations that semiconductor companies will sell more dollars as they expand shareholder returns, also supported the won.

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Given the stronger-than-expected supply of dollars from companies, it is necessary to open the lower end of the forecast to the low 1,300-won range in the short term.

The won’s gains continued despite U.S. employment data beating market expectations. Stronger U.S. employment figures are generally seen as a factor that could increase the likelihood of higher interest rates and strengthen the dollar. Analysts said accumulated current-account surpluses and weaker foreign selling of South Korean stocks could allow the exchange rate to move toward the 1,300-won level in the short term.

Kwon Ah-min, a researcher at NH Investment & Securities, said the stronger-than-expected supply of dollars from companies meant the lower end of the forecast should be opened to the low 1,300s. She also said structural dollar demand from overseas investment by South Koreans would support the exchange rate over the medium and long term. NH expects an average rate of about 1,380 won in the fourth quarter, while Kiwoom Securities forecasts a return to the upper 1,300s in a month and the low 1,400s by year-end, citing policy uncertainty including the U.S. midterm elections in early November.

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In the medium to long term, structural dollar demand, driven by overseas investment by domestic investors, will support the lower end of the exchange rate.