The won-dollar exchange rate against the U.S. dollar closed at 1,528.9 won on the 11th, down 9.1 won from the previous trading day. Compared with when it briefly neared 1,560 won last week, the pace has cooled, but it remains high against the five-year average of 1,334 won. On a weekly closing basis, the won-dollar rate has stayed above 1,500 won for 19 consecutive trading days from the 15th of last month through the day, the longest stretch after the foreign exchange crisis (49 consecutive trading days).
The decline in the won-dollar rate that day is seen as due to expectations for U.S.-Iran cease-fire talks. If the war ends, risk appetite recovers. As demand for the safe-haven dollar falls, it becomes a factor pushing the won-dollar rate lower.
U.S. President Donald Trump said on the 11th (local time) that he halted retaliatory strikes toward Iran, saying, "We reached a great agreement on the war with Iran." The U.S. military had launched airstrikes after a U.S. Army helicopter passing through the Strait of Hormuz crashed in an Iranian attack. Iran, however, said it had not made a final decision.
Going forward, the won-dollar rate is expected to hinge on whether foreign investors continue net selling of domestic stocks. If foreigners sell domestic stocks and convert proceeds into dollars, dollar demand could increase and push the won-dollar rate higher.
Foreign investors had net sold domestic stocks for 24 consecutive trading days through the previous day, but net bought 2.7 trillion won that day. Foreign investors net sold 1.4 trillion won the previous day.