The won-dollar exchange rate has fallen to 1,394 won, marking the lowest level in six months. This is due to increased expectations for an appreciation of the won following news of currency negotiations between South Korea and the United States.
According to the Seoul foreign exchange market on the 15th, the exchange rate closed at 1,394.5 won, down 25.7 won from the previous trading day's closing price (1,420.2 won) as of 3:30 p.m. This is the lowest level based on closing prices since Nov. 20 of last year (1,391.0 won).
The exchange rate opened at 1,410.9 won, down 9.3 won from the previous trading day's closing price, and expanded its decline, falling below 1,400 won during the morning. It dropped to 1,391.0 won at 12:38 p.m., and maintained the 1,390 won range until the market closed.
There are analyses suggesting that expectations for an appreciation of the won increased after news of the Korea-U.S. currency negotiations. In last month's '2+2 trade talks,' the two countries selected the exchange rate as one of the agenda items. In relation to this, on the 5th, Choi Ji-young, the International Economic Management Director of the Ministry of Economy and Finance, reportedly met with Robert Caproa, the U.S. Deputy Assistant Secretary for Asia at the Treasury Department, in Milan, Italy, to discuss details.
Despite reports from foreign media that the U.S. would not include the exchange rate issue on the trade negotiation table, the market appears to be anticipating a won appreciation and a dollar depreciation. According to Investing.com, the dollar index, which shows the value of the dollar against six major currencies, recorded 100.69 as of 4:05 p.m., slightly down from 101 the previous day.
Foreign investors also contributed to the decline in the exchange rate by maintaining a net buying advantage in the domestic stock market. Foreign investors have continued their buying trend for the seventh consecutive trading day, net buying around 260 billion won in the KOSPI market.
Wi Jae-hyun, an economist at NH Futures, noted, “Although the current market outlook suggests a gradual decline in exchange rates due to a weak dollar, there are observations of excessive concentration in supply and demand merely from the mention that exchange rate issues were discussed in trade negotiations,” adding that “this phenomenon is more pronounced in night markets or offshore exchange rates, where bids are thin and domestic supply and demand reflection is lacking.”