Won Falls to Two-Year Low Against Dollar as Yen and Yuan Weaken
The won-dollar exchange rate closed the daytime session at 1,330.3 won on the 19th, its lowest level in roughly two years since October 2024. The rate opened at 1,336.0 won in the Seoul foreign exchange market and fell to as low as 1,327.6 won at 2:49 p.m. Even at its intraday low, it marked the weakest level since October 2, 2024 (1,317.1 won).
Behind the won's strength is dollar selling by exporters. With the yen and yuan plunging together, exporters sold dollars for won, driving up the Korean currency's value. Lee Nak-won, an FX derivatives specialist at NH Bank, said, "Exporter negotiations likely accounted for more than 80 percent of the exchange rate decline," adding that "dollar sales by major companies such as Samsung Electronics and SK hynix have been pouring in at levels comparable to July." He also pointed to the possibility of investment-driven selling, noting, "Looking at corporate accounts among residents' foreign currency deposits in July and August, deposits have not accumulated in line with the foreign currency earnings they generate, suggesting companies are offloading their dollars."
The won-dollar rate maintained its stable trajectory even amid heavy net selling by foreign investors. Despite foreigners dumping 17.58 trillion won worth of Kospi shares this month and sending stock prices sharply lower, the exchange rate held steady in the 1,330-1,340 won range. According to KB Kookmin Bank, a 1 trillion won increase in foreign net selling has historically been associated with an average 1.56 won rise in the won-dollar intraday range, but this correlation has weakened recently.
The won's strength persisted even as the dollar index, which measures the dollar against six major currencies, remained above 100 for consecutive days, standing at 101.879 as of 3:30 p.m. that day.
The won also appreciated sharply against the yuan and yen. The won-yuan rate fell to an intraday low of 198.78 won, its lowest since October 2 last year (196.44 won), with the won maintaining its edge even after the People's Bank of China announced a stronger daily yuan fixing. The won-yen conversion rate fell 5.58 won from the previous trading day to 842.25 won per 100 yen, leaving the lowest reading in about 18 years and 9 months since January 2, 2008 (840.27 won).
On the outlook, Shinhan Bank projected this week's exchange rate range at 1,325-1,355 won, while Hana Bank forecast 1,325-1,345 won.
