The won-dollar exchange rate opened at 1,530 won on the 4th. It rose 13.6 won from the previous transaction day. It then broke through 1,530 won intraday. This is the first time since Mar. 31.
The won-dollar exchange rate fell to 1,520 won at 9:14 a.m., immediately after Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol's "verbal intervention." But it began to rebound, rising to 1,528.9 won at 10:14 a.m. Deputy Prime Minister Koo said at the market situation review meeting that day, "We will take necessary measures immediately against excessive one-sided moves."
There is an outlook that the won-dollar exchange rate will stay around 1,530 won today. Although cease-fire talks between the United States and Iran are under way, military clashes have occurred in the Middle East. When wartime conditions persist, demand for the safe-haven dollar expands, and the won-dollar exchange rate tends to rise.
On the 2nd, U.S. forces disabled an Iranian oil tanker with missiles. In retaliation, the Islamic Revolutionary Guard Corps (IRGC) attacked a U.S. Air Force base in Kuwait and the U.S. Navy 5th Fleet base in Bahrain, among others. However, U.S. President Donald Trump said on the 3rd (local time), "I heard the negotiations are going very well," adding, "A deal may not be reached, but if it is, it could happen as soon as this weekend."
Foreigners' net selling of domestic stocks is also expected to increase due to risk-off sentiment. When foreigners sell domestic stocks and exchange the proceeds into dollars, dollar demand expands and the won-dollar exchange rate rises. Foreign investors recorded net selling of 2.914 trillion won on the 1st and a further 6.594 trillion won on the 2nd. Foreigners' net selling amounted to 43 trillion won in March, 5 trillion won in April, and 44 trillion won in May.
However, as the won-dollar exchange rate has exceeded 1,530 won, exporters are likely to sell dollars they hold. Min Kyung-won, a Woori Bank researcher, said, "Offshore participants are also highly likely to switch to selling at the highs."