Won-Dollar Exchange Rate Falls to 25-Month Low...Won-Yen Rate Hits Lowest in 18 Years and 10 Months

[Financial News] The won-dollar exchange rate fell to its lowest level in 25 months this month. The sharp rise in semiconductor exports is believed to have dramatically expanded the domestic supply of dollars. The won-yen cross rate hit a new low in 18 years and 10 months.
According to the Bank of Korea's Economic Statistics System on the 18th, the average exchange rate over the 12 trading days so far this month (as of 3:30 p.m.) was 1,342.6 won. This was its lowest level in two years and one month, since the monthly average of 1,332.8 won in September 2024.
The monthly average exchange rate rose to 1,492.5 won last March, affected by the fallout from the Middle East war and other factors. In June, it climbed sharply to 1,528.0 won as rising oil prices coincided with foreign investors' stock sales, among other factors.
The exchange rate began to turn downward in July, following, among other developments, the listing of SK hynix's American depositary receipts (ADRs). Dollar sales and supply by exporting companies, particularly in the semiconductor sector, surged. The monthly average exchange rate fell to 1,488.9 won in July, 1,404.4 won in August, and 1,358.8 won in September.
On the 16th of this month, it fell as low as 1,328.9 won intraday, setting a new low for the year. This was the lowest level since 1,317.1 won on October 2, 2024.
The exchange rate's decline is attributed to the sharp increase in dollar supply resulting from the semiconductor export boom, along with the central bank's tightening stance and other factors. 
Shin Hyun-song, governor of the Bank of Korea, said at a parliamentary audit before the National Assembly's Finance and Economy Planning Committee on the 12th, in response to a question about the outlook for the won's value, "There is room for the won to strengthen further going forward." The assessment is that the two base-rate hikes carried out in July and August could lead to a stronger won.
 The won's strength was also reflected in the won-yen exchange rate.  This month's average won-yen cross rate was 849.0 won per 100 yen, its lowest level in 18 years and 10 months since December 2007, when it was 829.2 won. With the won strengthening against the dollar and yen-weakening factors such as slower growth in Japan and worsening fiscal conditions at work, downward pressure on the won-yen rate is believed to have increased.
[email protected] Kim Jun-hyeok Reporter