The USD-KRW exchange rate rebounded to 1,506.10 won as of 3:30 PM, up 7.60 won from the previous close of 1,498.50 won. The rate tested support below 1,500 won earlier in the session. Foreign investors' net purchase of 130 billion won in Korean stocks and less hawkish US June FOMC minutes initially pressured the rate lower, while technical buying after the prior day's decline and US-Iran conflict news drove the rebound. Dealers noted supply-demand dynamics dominated over global dollar trends.
USD-KRW Tests Intraday Low at 1,496.80 Won
The exchange rate opened at 1,507.50 won and declined to an intraday low of 1,496.80 won during morning trading. This marked the lowest level since the intraday low of 1,494.90 won recorded on May 29. The rate reached an intraday high of 1,509.00 won at 10:32 AM, resulting in a 12.20 won intraday range. The rate stood 1.10 won higher compared to the New York session close of 1,505.00 won at 6 AM.
Foreign Investors Net Buy 130 Billion Won in Korean Stocks
Foreign investors net purchased 130 billion won worth of shares in the KOSPI market on the trading day. This represented the second consecutive session of net stock buying by foreign investors. The yen strengthened against the dollar, contributing to downward pressure on the USD-KRW rate during the early session. Market participants also cited expectations related to SK Hynix's US ADR listing fund inflows as a psychological factor supporting won strength.
US June FOMC Minutes Interpreted as Less Hawkish
The US June FOMC minutes released overnight were interpreted as less hawkish than anticipated. This interpretation applied downward pressure on the dollar index. However, the USD-KRW rate diverged from global dollar weakness as domestic supply-demand factors exerted greater influence on price action.
US-Iran Conflict News Adds Market Uncertainty
US President Donald Trump stated he received communication from Iran expressing a desire for an agreement, while warning of a strong response to further provocations. The conflict raised overall market uncertainty. International oil prices declined slightly on perceptions the conflict would not escalate into full-scale war. August delivery WTI crude oil traded around $73 per barrel, down approximately 0.2% from the previous session.
Dealers Attribute Rate Movement to Supply-Demand Factors
A securities firm dealer stated the rate showed reduced correlation with the global dollar amid a lack of specific issues, noting short covering occurred as the dollar weakened but the USD-KRW rate moved in the opposite direction. The dealer added that reduced foreign stock selling and continued SK Hynix-related flows would likely maintain downward pressure on the rate. A bank dealer observed the USD-KRW rate retraced recent declines as buying interest emerged amid geopolitical risk, while the dollar-yen rate fell. The dealer noted the intraday attempt to break below 1,500 won failed, with support at lower levels proving stronger than dollar weakness stemming from reduced rate hike expectations in the FOMC minutes.
BoK Governor Shin States Won Has Room to Strengthen
Bank of Korea Governor Shin Hyun-song stated during a National Assembly Finance and Economy Committee briefing that the won has considerable room to strengthen going forward. Governor Shin characterized currency swaps as a mechanism to bolster foreign exchange liquidity, diagnosing that liquidity is not currently insufficient. He assessed that foreign investors' won selling related to domestic stock investment rebalancing would ease in the future. Regarding a question about the possibility of a 50 basis point rate hike at the upcoming Monetary Policy Board meeting, Governor Shin provided a response that appeared to draw a line on such action.
HD Hyundai Heavy Wins 469.9 Billion Won Shipbuilding Order
HD Korea Shipbuilding & Offshore Engineering disclosed it won an order for six petrochemical product carriers from a Middle East-based shipping company, totaling 469.9 billion won. In the currency futures market, foreign investors net sold approximately 12,000 dollar futures contracts. The People's Bank of China set the dollar-yuan central parity rate at 6.8036 yuan, down 0.0041 yuan (0.06%) from the previous session, representing yuan appreciation.
Market Data and Upcoming Events
The market average rate (MAR) was set to be announced at 1,504.20 won. Spot FX trading volume totaled $12.417 billion across Seoul Money Brokerage Services and Korea Financial Telecommunications and Clearings Institute. The KOSPI closed at 7,291.91, up 0.62%, while the KOSDAQ finished at 794.00, up 1.15%. The dollar-yen rate stood at 162.362 yen, with the yen-won cross rate at 929.21 won per 100 yen. The euro-dollar rate was 1.14365 dollars, and the dollar index registered 100.876. The offshore dollar-yuan (CNH) rate was 6.7976 yuan. The yuan-won direct trading rate closed at 221.47 won per yuan, with an intraday low of 220.16 won and high of 221.75 won. US weekly initial jobless claims data was scheduled for release in the evening, with speeches planned from New York Fed President John Williams and Dallas Fed President Lorie Logan.
FAQ
What caused the USD-KRW exchange rate to rebound after testing support below 1,500 won?
The rate rebounded due to technical buying following the previous day's sharp decline and increased market uncertainty from US-Iran conflict news. Dealers noted that supply-demand factors, particularly support at lower levels, outweighed the downward pressure from less hawkish US FOMC minutes and foreign stock purchases.
What did Bank of Korea Governor Shin say about the won's outlook?
Governor Shin Hyun-song stated during a National Assembly briefing that the won has considerable room to strengthen going forward. He assessed that foreign investors' won selling related to domestic stock investment rebalancing would ease in the future and noted that currency swaps serve to bolster foreign exchange liquidity, though liquidity is not currently insufficient.
