The Korean won appreciated 4.27% against the US dollar in July 2026 month-to-date, the highest appreciation rate among major currencies, as the won/dollar exchange rate fell to 1,478.5 won on July 17. The appreciation was driven by dollar inflows from SK Hynix's American Depositary Receipt (ADR) listing, which raised approximately $26.5 billion, and increased dollar selling by export companies. The Bank of Korea raised its base rate from 2.5% to 2.75% on July 16, the first increase in 3 years 6 months, supporting the won's strength alongside improved economic fundamentals.
SK Hynix ADR Drives Won/Dollar Rate to Two-Month Low
The won/dollar exchange rate closed at 1,478.5 won on July 17 at 3:30 PM benchmark, down 1.9 won, according to the Seoul foreign exchange market. This marked the lowest level since May 11, when the rate closed at 1,472.4 won. The rate later rebounded to 1,486.0 won by 6 AM on July 18 due to heightened Middle East tensions.
The exchange rate fell 70.9 won from the end of June closing rate of 1,549.4 won. This represents the largest monthly decline since November 2022, when the rate dropped 105.5 won month-over-month.
Seo Jung-hoon, chief research fellow at Hana Bank, stated that "dollar selling volumes presumed to be from SK Hynix are entering the market in spot currency form" and "once the rate fell below 1,500 won, upward expectations broke and the rate quickly entered the 1,480 won range." He added that "shipbuilding companies and heavy industry firms are selling dollars through currency hedging, recognizing that the exchange rate recently peaked."
Foreign investor stock selling, which had pushed the rate higher earlier in July, also subsided. Foreign investors net purchased approximately 222.6 billion won worth of stocks in one week, turning to net buying for the first time in four weeks as the KOSPI fell below 7,000 and rebalancing demand decreased.
Korean Won Leads Major Currencies with 4.27% Monthly Gain
The Korean won's 4.27% appreciation against the dollar from the end of June represents the largest gain among major currencies, according to Yonhap Infomax. This is approximately three times the second-place British pound's 1.45% gain.
During the same period, the dollar index measuring the dollar against six major currencies fell 0.4%. The Japanese yen rose only 0.08%, while other Asian currencies showed modest movements: Chinese onshore yuan (+0.17%), Australian dollar (+0.88%), Hong Kong dollar (+0.04%), and Taiwan dollar (-1.80%). European currencies including the euro (+0.15%), Russian ruble (+0.12%), and Swiss franc (+0.04%) also posted small gains against the dollar.
Lee Min-hyuk, economist at KB Kookmin Bank, stated that "supply conditions shifted from dollar demand dominance to supply dominance" as "foreign investor rebalancing eased with the KOSPI's large correction, and position adjustments occurred in advance reflecting SK Hynix ADR fund inflows."
Won Strengthens Against Yen to 1-Year-8-Month Low
The won/yen cross rate fell to 908.11 won per 100 yen on July 17, the lowest level since November 26, 2024 (906.76 won), according to Yonhap Infomax. The yen/dollar rate remained at 162.400 yen on July 18, staying in the 162 yen range after reaching the high 162 yen range earlier in July.
Min Kyung-won, economist at Woori Bank, explained that "the synchronization link between the two currencies broke as yen recovery stagnated while the won showed strength supported by actual export payment conversion demand and the Bank of Korea's rate hike stance."
Analysts Project Year-End Range of 1,380-1,560 Won
Min Kyung-won forecasted that "the won's gradual strengthening will continue until year-end" as "export companies' currency conversion demand grows and foreign investor fund outflows triggered by stock market overheating reverse to inflows." He projected a second-half range of 1,380-1,560 won, with third-quarter and fourth-quarter average rates at 1,490 won and 1,430 won respectively.
Lee Min-hyuk stated that "if current supply conditions persist, further rate declines are possible" and "if the psychological support line of 1,480 won is breached, the short-term floor is open to 1,450 won, with possibility of falling below the mid-1,400 won range in the second half." He added that "however, if Middle East geopolitical risks grow again or foreign investor rebalancing resumes, a rebound to the 1,500 won line cannot be ruled out."
Seo Jung-hoon projected that "the rate will gradually decline to around 1,450 won by year-end" as "Korea raised rates before the US and growth forecasts improved, creating positive fundamentals for the won."
FAQ
What caused the Korean won to appreciate 4.27% against the dollar in July 2026?
The won's appreciation was primarily driven by dollar inflows from SK Hynix's ADR listing, which raised approximately $26.5 billion, combined with increased dollar selling by export companies and the Bank of Korea's base rate increase from 2.5% to 2.75% on July 16.
How low did the won/yen exchange rate fall in July 2026?
The won/yen cross rate fell to 908.11 won per 100 yen on July 17, the lowest level since November 26, 2024, as the won strengthened significantly while the yen remained weak at around 162 yen per dollar.
What is the forecast range for the won/dollar exchange rate by year-end 2026?
Analysts project a year-end range of 1,380-1,560 won, with third-quarter average at 1,490 won and fourth-quarter average at 1,430 won, though some analysts see potential for the rate to fall below the mid-1,400 won range in the second half.
