▲ The Kospi and exchange rates are displayed on an electronic board in the dealing room of the Hana Bank headquarters in Jung-gu, Seoul, on the 5th. (Photo: Yonhap News)
The won-dollar exchange rate dropped to the 1,410-won range during trading today (the 6th), marking its lowest level in about 10 months.
This is interpreted as the combined result of falling international oil prices, the strengthening of the Japanese yen, and improved supply and demand in the foreign exchange market.
As internal and external variables simultaneously support the strengthening of the Korean won, some analyses suggest that the exchange rate could fall into the 1,300-won range in the short term.
In the Seoul foreign exchange market today, the won-dollar exchange rate was tallied at 1,423.8 won, down 0.7 won as of 3:30 PM.
The exchange rate started the day at 1,423.0 won and rose to 1,424.0 won around 9:15 AM.
It subsequently shifted to a downward trend, falling to 1,414.5 won around 11:07 AM, and stayed below 1,420 won until around 3 PM.
The intraday low recorded today is the lowest level in about 10 months since October 2 of last year, when it hit 1,399.5 won.
The decline in the exchange rate appears to have been driven by stabilizing international oil prices following the easing of geopolitical risks originating from the Middle East.
At the New York Mercantile Exchange today, the closing price for September delivery West Texas Intermediate (WTI) futures stood at $75.22 per barrel, down 0.7% from the previous session.
Previously, Brent crude and WTI futures plummeted 4.7% and 5.1%, respectively, on the 3rd.
The U.S. daily Wall Street Journal reported the previous day that Iran and Oman are finalizing a draft 60-day tentative agreement to reopen the Strait of Hormuz.
In addition, improvements in the supply and demand conditions of the domestic foreign exchange market are analyzed to have widened the drop in the exchange rate.
The volume of dollars flowing into the country has increased following SK Hynix's American Depositary Receipts listing, and export companies are pouring out net-selling orders for dollars amid the declining exchange rate, seemingly driving the currency down.
The influence of the yen's strength, driven by joint foreign exchange market intervention by the U.S. and Japan, which is intensifying upward pressure on the dollar's weakness, also appears to be continuing.
The dollar index, which indicates the value of the dollar against six major currencies, rose 0.056 to 99.746.
This index exceeded 100 on the 4th, but has fallen back below the 100 mark starting from the previous day.
As of 3:30 PM, the yen-dollar exchange rate stood at 157.838 yen, up 0.07% from the previous trading session.
The yen-dollar exchange rate approached 164 yen at the end of last month, reaching its highest level in about 40 years.
In response, the U.S. and Japan jointly purchased the Japanese yen for the first time in 28 years since 1998.
When both countries officially confirmed this on the 3rd, the yen-dollar exchange rate plunged to 155.238 yen.
As of 3:30 PM today, the won-yen cross exchange rate stood at 902.20 won per 100 yen, down 1.01 won from the previous trading session.
On the Kospi market today, the benchmark index closed down 4.58% from the previous day at 6,296.38, as foreign investors net-sold 3.3273 trillion won worth of domestic stocks, which appears to have limited any further decline in the exchange rate.
Views are emerging both inside and outside the market that the won-dollar exchange rate could sink into the 1,300-won range between late August and early September.
Park Hyung-joong, an economist at Woori Bank, analyzed, "The ADR volume effect is expected to continue until the middle of this month, and because the U.S. and Japan have stepped into market intervention, vigilance is also high," adding, "The exchange rate could temporarily fall to the upper 1,300-won range."
However, some analyses suggest that if the influx of dollars originating from SK Hynix diminishes starting from the end of this month and the possibility of a benchmark interest rate hike by the U.S. Federal Reserve grows next month, momentum for a rebound in the exchange rate could pick up again.
Economist Park projected, "If the Fed's tightening stance in the second half turns out stronger than expected, there is a possibility that the exchange rate could bounce back above the 1,400-won mark."
(Photo: Yonhap News)
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