While the won-dollar exchange rate fell 5.3% this month, the yen-dollar rate rose 0.8%. As the won strengthened and the yen continued to weaken, the won-yen rate fell below 900 won for the first time in 1 year and 8 months.
This is a different trend from when the two currencies had moved in the same direction. Foreign exchange market officials say this phenomenon picked up around on the 10th with SK hynix's U.S. depository receipts (ADR) listing.
◇ Since the Middle East war, the won and yen had weakened together... in July, only the won strengthened
According to Seoul Money Brokerage on the 25th, the co-movement correlation coefficient between the won-dollar rate and the yen-dollar rate over the past month was -0.6. The closer the coefficient is to 1, the more the two currency moved in the same direction. If the two currency move in opposite directions, the correlation turns negative. Narrowed to the past week, the negative correlation widens to -0.63.
This trend is the exact opposite of the previous pattern. From June last year to June this year, the won-yen correlation reached 0.9. That was because foreign investors typically bought or sold financial assets in Korea and Japan—Asia's leading export-driven countries—together across stocks, bonds and foreign exchange. When the Middle East war broke out at the end of February, the two currencies of the oil import‑dependent countries weakened in unison.
But this month, the won has clearly strengthened while the yen has stayed weak, showing a decoupling between the two currency. The won's appreciation rate ranked No. 1 among the Group of 20 (G20). The won-dollar rate fell for eight straight trading days from the 1,550-won range early this month, ending weekly trading at 1,466.6 won at 3:30 p.m. on the 24th.
By contrast, the yen-dollar rate has steadily climbed from the 150-yen range at the end of last year and traded in the 162–163-yen range this month. The intraday move to 163 yen per dollar was the first since December 1986, or 39 years and 7 months.
◇ "Dollar supply-demand shifts on SK hynix ADR effect"
Analysts say the won-yen decoupling is not because the two countries' macroeconomic conditions have diverged, but because of a won-specific strengthening factor: "SK hynix U.S. ADR listing."
SK hynix listed ADRs on Nasdaq on the 10th and is said to have begun converting the $26.5 billion it raised into won starting on the 15th. The $26.5 billion exceeds the $19.8 billion supplied through the Korea-U.S. currency swap during the COVID-19 pandemic in 2020. Even before the ADR listing, news that a large amount of dollars would hit the market reportedly prompted other corporations and investors to start selling dollars they held.
Park Sang-hyun, an analyst at iM Securities, said, "For one to two months, or up to a quarter at most, while SK hynix sells dollars in tranches, the won and yen could move in different directions," adding, "Once the SK hynix effect fades, the two currency could re-synchronize."