Roller-Coaster Exchange Rate Falls Sharply Into the 1,400 Won Range After Approaching 1,600

[Financial News] The won-dollar exchange rate, which had surged to the 1,560 won range last month, has fallen to the mid-1,400 range in just one month.
 According to the financial sector on the 2nd, the won-dollar exchange rate in the Seoul Foreign Exchange Market fell to the low 1,420 won range during daytime trading on the 31st of last month, closing at 1,424.0 won on a daytime basis. That was the lowest level in about six months, since 1,422.5 won on Jan. 28. However, it ended trading at 1,435.5 won on the 1st of this month.
 The sharp decline in the exchange rate, which had at one point exceeded 1,500 won this year, is mainly attributed to improved growth in South Korea and changes in dollar supply and demand conditions in the foreign exchange market.
 In particular, stronger-than-expected second-quarter economic growth, which came in at 0.6% quarter on quarter when announced last month, and the narrowing of the Korea-U.S. interest rate gap after the Bank of Korea raised its benchmark rate around the same time, helped support the won's strength.
 A current account surplus driven by strong semiconductor exports, inflows related to American Depositary Receipts (ADR) following SK hynix's Nasdaq listing, and foreign exchange conversions by some domestic exporters, including shipbuilders, also contributed to the increase in dollar supply.
 Still, uncertainty remains. If tensions in the Middle East push international oil prices sharply higher again, or if U.S. inflation rebounds, the Fed's hawkish stance and a stronger dollar could come back into focus. Financial industry officials also note that if foreign investors increase net selling of domestic stocks, the won's strength is likely to lose momentum.

[email protected] Han Young-jun Reporter