On the 24th, the won closed in the 1,477 range against the U.S. dollar, surging to the highest level since April this year. The view is that the uptrend in the exchange rate persisted as foreigners dumped domestic stocks. News came in the afternoon that the foreign exchange authorities had formed a consultative body to respond to the exchange rate, but it failed to break the upward momentum.
In the Seoul foreign exchange market that day, the dollar-won exchange rate opened at 1,471.9 won, down 3.7 won from the previous transaction day. It widened its early decline to 1,469.1 won but soon turned higher. It then rose steadily to finish weekly trading at 1,477.1 won, up 1.5 won from the previous transaction day (as of 3:30 p.m.). The weekly trading close is the highest since Apr. 9 (1,484.1 won).
Early in the session, the exchange rate fell as expectations for a U.S. Federal Reserve (Fed) benchmark rate cut revived. John Williams, president of the Federal Reserve Bank of New York, regarded as the Fed's No. 2, attended an event in Santiago, Chile, on the 21st (local time) and said, "Monetary policy is somewhat restrictive now, so there is room to adjust the benchmark rate," which set things in motion.
However, as foreigners sold stocks on the Korea Exchange, the exchange rate rose again. Foreigners were net sellers of 424.2 billion won in stocks that day, leading the index decline. Although the net selling shrank from the previous transaction day on the 21st (2.8229 trillion won), the continued selling appears to have weighed on the market.
Late in the session, the won moved in tandem with a weaker yen, adding momentum to the rise in the exchange rate. According to Investing.com, as of 4:17 p.m. that afternoon, the dollar-yen rate was 156.75 yen, up 0.24% from the day before. Since first surpassing 156 yen on the 19th, the dollar-yen rate has not returned to its previous level for five days.
As the exchange rate kept rising, the foreign exchange authorities and the National Pension Service formed a consultative body to respond to volatility. This body, involving the Ministry of Economy and Finance, the Bank of Korea, the National Pension Service, and the Ministry of Health and Welfare, held its first meeting that day and decided to review the impact of the National Pension Service's expanded overseas investment on the foreign exchange market. However, even after the meeting, the upward trend in the exchange rate did not break.
Park Sang-hyun, an analyst at iM Securities, said, "Foreigners who were net buyers of domestic stocks early in the session turned to net selling from the afternoon, pushing up the exchange rate," adding, "The weak yen also affected the rise in the exchange rate." Min Kyung-won, an analyst at Woori Bank, said, "With news of the four-party consultative body's formation, caution about authorities' intervention grew, but it did not have much impact because no concrete response was announced."