The won-dollar exchange rate against the U.S. dollar closed at 1,462.8 won on the 4th. It fell 20.5 won from the previous transaction day.
The decline in the won-dollar exchange rate is seen as driven by foreign investors' buying of domestic stocks. On this day, foreigners posted a net purchase of 4.2557 trillion won in the Korea Exchange. When demand for the won increases, the dollar loses value and the won-dollar exchange rate also falls. On this day, the KOSPI index closed at 6,936.99, hitting a record high. It was up 338.12 points (5.12%) from the previous transaction day.
Revived investor sentiment toward risk assets such as U.S. tech stocks also played a role. As all seven U.S. mega-cap tech stocks (Magnificent 7, M7) reported results exceeding market expectations, the Standard & Poor's (S&P) 500 index recorded 7,230.12 on the 1st (local time), notching a record high for the second straight day.
Partial easing of uncertainty over a U.S.-Iran war also contributed to the drop in the won-dollar exchange rate. U.S. President Donald Trump said that starting the morning of the 4th Middle East time, he would launch "Project Freedom" to help third-country ships trapped in the Strait of Hormuz get out, sending international oil prices lower.
However, Iranian authorities pushed back, saying Project Freedom amounts to a breach of the cease-fire. Ebrahim Azizi, chair of the Iranian Parliament's National Security and Foreign Policy Committee, directly criticized President Trump's remarks as delusional, saying, "Any attempt by the United States to intervene in the new maritime order will be regarded as a violation of the cease-fire."