Won-Dollar Rate Jumps 4.5 Won on US-Iran Tensions

The Won-Dollar exchange rate in the Seoul foreign exchange market recorded an uptrend on the morning of the 29th, as military tensions between the United States and Iran escalated. The Won-Dollar exchange rate opened at 1536.5 won, an increase of 4.5 won from the previous trading day. A surge in military tension surrounding the Strait of Hormuz has strengthened safe-haven demand.

Following Iran's attack on civilian vessels passing through the Strait of Hormuz on the 25th, retaliatory strikes by the US and counterattacks by Iran were reported. The US Central Command announced on the 27th (local time) that it had conducted airstrikes on Iran in response to Iran's attack on commercial ships. Although reports emerged on the 28th that the US and Iran had agreed to cease attacks against each other, market anxiety still lingered.

Amid these external uncertainties, there was a possibility of foreign capital outflow from the domestic stock market. Min Kyung-won, an economist at Woori Bank, predicted that concentrated purchases by offshore custodians, settlement payments by importers, and currency exchange demands from Korean retail investors trading overseas stocks (known as 'Seohak Gaemi') would influence the weakening trend of the Korean won. Meanwhile, the KOSPI index on the 29th weakened and declined amid large-scale net selling by foreign investors.