Seoul's foreign exchange swap market saw divergent movements across the term structure, with long-dated tenors declining on rising US Treasury yields while short-term tenors gained support from anticipated dollar inflows tied to SK Hynix's American Depositary Receipt listing. The 1-year FX swap point closed at -14.50 won, down 0.40 won from the opening, while the 3-month tenor rose 0.05 won to -3.35 won. The split reflected dual pressures: US 10-year Treasury yields climbing above 4.60% for the first time since May drove weakness in longer maturities, while expectations of dollar deposits flowing into domestic banks from the SK Hynix ADR listing bolstered short-dated segments.
FX Swap Points Record Mixed Closings Across Tenors
In the foreign currency funding market, the 1-year maturity FX swap point closed at -14.50 won, down 0.40 won from the opening. The 6-month tenor fell 0.20 won from the opening to -7.50 won, while the 3-month tenor rose 0.05 won to -3.35 won. The 1-month tenor closed at -0.90 won, down 0.05 won from the opening. Ultra-short tenors showed overnight at -0.04 won and tomorrow-and-next at -0.01 won.
US Treasury Yields Rise Above 4.60% for First Time Since May
The 1-year tenor declined under the influence of US interest rates. In the New York bond market, US Treasury yields rose reflecting oil price increases due to Middle East geopolitical risks and inflation concerns. The 10-year Treasury yield climbed to the 4.61% range, exceeding 4.60% for the first time since May, and continued rising during Asian trading hours.
SK Hynix ADR Listing Drives Short-Term Dollar Inflow Expectations
Short-term tenors generally rose, showing differentiation from longer maturities. Market participants interpreted the support for short-term segments as reflecting expectations that dollar cash would increase as SK Hynix ADR listing proceeds flowed in. A swap dealer at a foreign bank stated, "Expectations were reflected that short-term dollar cash would increase as SK Hynix listing funds flow into domestic bank deposits. While the dollar inflow effect itself is clear, the market may have somewhat priced it in ahead given the large scale." The dealer explained, "The 1-year segment faced downward pressure from the influence of rising US Treasury yields. In the morning, foreign participants actively bought short-term tenors, but beyond the SK Hynix factor, there may have been some volume related to offshore custody."
FAQ
What happened to Seoul's FX swap points?
Seoul's FX swap market showed divergent movements, with the 1-year tenor falling 0.40 won to -14.50 won while the 3-month tenor rose 0.05 won to -3.35 won, reflecting opposing pressures from US Treasury yield increases and SK Hynix ADR listing inflow expectations.
Why did US Treasury yields affect Korean FX swap points?
US 10-year Treasury yields rose above 4.60% for the first time since May, reaching the 4.61% range due to Middle East geopolitical risks and inflation concerns, which created downward pressure on longer-dated Korean FX swap tenors.
How did SK Hynix's ADR listing impact the swap market?
Expectations of dollar deposits flowing into domestic banks from SK Hynix's ADR listing proceeds supported short-term FX swap tenors, with market participants anticipating increased short-term dollar cash availability.
