The won-dollar exchange rate against the U.S. dollar closed weekly trading at 1,336.1 won at 3:30 p.m. on the 9th. That was down 9.5 won (0.7%) from the prior trading day's weekly close. On the same basis, it is the first time in about 1 year and 11 months since Oct. 4, 2024 (1,333.7 won) that the rate has been in the 1,330-won range.
The rate opened trading at 1,340.5 won and stood at 1,339.5 won at 9 a.m. It rose to as high as 1,342.1 won around 11:35 a.m. (intraday high), then reversed lower to 1,335 won around 3:04 p.m. (intraday low).
◇ "Exporters' dollar selling offsets strong dollar"
Contrary to market expectations that the rate could reach the 1,340-won range, it fell that day. Despite rising international oil prices on worsening Middle East tensions and a drop in U.S. stocks, the stronger impact came from domestic major export corporations' dollar selling, analysts said. When corporations sell dollars in the Seoul foreign exchange market, the won strengthens and the rate falls.
Corporations' dollar sales often occur at month-end as a seasonal factor. But starting in mid-July, corporations began selling dollars frequently. As a result, the average rate in July was 1,497.4 won, down 1.95% from the prior month's average (1,527.3 won). This explains why the rate fell quickly even as international oil prices and U.S. Government Bonds yields were both rising.
Min Kyung-won, a Woori Bank researcher, said, "Corporations maintained steady dollar-selling responses, strengthening the won," and "They played a role in significantly offsetting the burden of risk-off sentiment or a strong dollar."
In particular, the recent strengthening of the Japanese yen also affected the rate. The won and the yen, both Asian currencies, tend to move in the same direction. A stronger yen tends to lift the won's value. The yen-dollar rate was 153.3 yen around a similar time that day. Compared with late July (163.4 yen), it fell 10.1 yen (6.1%) in a month, the lowest level in about seven months.
◇ Upcoming variables: "semiconductor exports," "U.S. benchmark rate"
Experts cite the continuation of corporations' dollar selling as a variable for the rate going forward. For now, expectations are tilted toward the selling trend continuing for the time being. That is because inflows of dollars are growing with robust semiconductor exports.
In August, Korea's semiconductor exports totaled $46.65 billion, up 209% from a year earlier. They surpassed the previous record high set in June ($44.8 billion) to set another record high.
The Federal Reserve's decision on this month's benchmark rate also remains a variable. If the Fed raises rates and tightens liquidity, the dollar can strengthen and the rate can rise. The most recently released indicator, U.S. nonfarm payrolls for August, showed the largest increase in five months. That signals the U.S. economy is not weak and becomes a factor for a rate hike.