Won-Dollar Exchange Rate Pauses Its Decline; Stays in the 1,400 Won Range for 15 Trading Days

[Financial News] On the 4th, the won-dollar exchange rate closed the week at 1,432.5 won, up 2.7 won from the previous trading day. The 1,420-won range, which had held for two trading days, was broken, but the rate has remained above 1,400 won for 15 trading days since July 14.
Based on the closing price, the won fell by 125.4 won in July alone, marking the largest monthly drop since March 2009, during the global financial crisis.
A key factor behind the shift in the won's direction against the dollar was news that the proceeds from SK hynix's American Depositary Receipt (ADR) issuance would be used for domestic investment. Expectations of stronger demand for the won pushed the exchange rate lower. Another factor was exporters' sales of dollars they had been holding in the foreign exchange market.
The easing of foreign investors' stock selling, which had previously driven the exchange rate higher, also helped. In fact, foreign net selling in the domestic stock market fell sharply from 47.0338 trillion won in June to 9.8143 trillion won in July.
In addition, the Bank of Korea's Monetary Policy Board decided to raise the benchmark interest rate by 25 basis points (1 bp = 0.01 percentage point) last month, narrowing the Korea-U.S. interest rate gap and weakening the pull of dollars toward the United States. On the 29th of last month local time, the Federal Open Market Committee (FOMC) chose to hold rates steady, leaving the interest rate gap at 1.00 percentage point at the upper end.

[email protected] Kim Tae-il Reporter