On the 26th, the won started at 1,449.9 won against the U.S. dollar.
That day in the Seoul foreign exchange market, the won-dollar rate opened at 1,449.9 won, up 0.1 won from the previous session's (on the 24th) weekly transaction closing price as of 3:30 p.m. It was up 4.2 won from the 2 a.m. closing price on the 25th (1,445.70 won).
The rate plunged more than 30 won after the government launched strong verbal intervention on the 24th and unveiled a tax plan to ease capital gains taxes when Korean retail investors trading U.S. stocks invest domestically. Opening that day at 1,484.9 won, the rate dropped sharply to 1,470 won right after the verbal intervention, and fell to 1,460 won after the tax measure was announced. The rate continued to fall in the afternoon and closed the weekly transaction at 1,449.8 won.
Experts expect the rate on the 26th to move around the 1,450-won level due to caution over intervention by the foreign exchange authorities. Cho Yong-gu, a researcher at Shinyoung Securities, said, "The government's verbal intervention and tax measures effectively curbed the upward trend in the rate," adding, "The year-end closing rate is expected to remain in the 1,450–1,460 won range."
There is also speculation that large-scale dollar selling through the National Pension Service's strategic currency hedging could ramp up in earnest. When the won-dollar rate rises more than expected, the National Pension Service conducts currency hedging by selling up to 10% of its overseas asset in dollar forward contracts (agreeing in advance to sell dollars at a set rate). This increases dollar supply in the market, which has the effect of lowering the rate.
Lim Hwan-yeol, a researcher at Woori Bank, said, "As the rate has hovered around 1,485 won recently, conditions have formed for the National Pension Service's hedging supply to come out," adding, "On the 24th as well, the rate's decline steepened as institutional investors' accumulated dollar long positions were unwound, so going forward, the possibility of dollar selling by the National Pension Service will act as a factor limiting an increase in the rate."