Won strengthens past 1,500 against dollar amid yen's rise and SK Hynix offering hopes

The South Korean won experienced a significant strengthening against the U.S. dollar, closing the trading week below the 1,500 won mark for the first time since mid-May. This marks a notable shift after the currency had remained above this psychological threshold for 36 consecutive trading days.

Market analysts attribute the won's recent appreciation primarily to the strengthening of the Japanese yen, which has led to a broader trend of appreciation across Asian currencies. This regional strength has positively impacted the won, attracting buying interest. Additionally, anticipation surrounding SK Hynix's upcoming American Depositary Receipt (ADR) issuance on the Nasdaq is also seen as a contributing factor. The expected inflow of dollars from this offering is bolstering foreign exchange market conditions.

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The recent strengthening of the yen has led to a general trend of appreciation in Asian currencies, and the won has also received buying momentum in this process.

The strengthening trend has also been supported by increased dollar selling by exporters as the exchange rate approached the 1,520 won level. Furthermore, foreign investors reversed their selling trend in the stock market, becoming net buyers after a 14-day period of divestment, which also provided support for the won.

However, the sustainability of this downward trend in the won-dollar exchange rate remains uncertain. Renewed geopolitical tensions, particularly concerning the Strait of Hormuz, have led to a simultaneous rise in international oil prices and the U.S. dollar index. This heightened geopolitical uncertainty means the exchange rate remains vulnerable to fluctuations based on external variables.

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As the exchange rate fell to the early 1,520 won range, dollar selling (negotiation) volumes from exporters began to flow in, adding momentum to the downward trend.