The dollar-won exchange rate rose 2.0 won to 1503.4 won at 3:30 PM, breaching the 1500 won level after foreign investors' net selling on the KOSPI expanded to 1.7 trillion won scale. The rate had declined to the 1497 won range in the morning due to expectations of large-scale dollar inflows from SK Hynix's ADR listing capital. However, the KOSPI's nearly 9% intraday plunge to the 6800 level and the resurgence in foreign net selling after three quieter trading days drove the won weaker in the afternoon session.
Exchange Rate Breaches 1500 Won After Morning Decline to 1497 Won
At around 9 AM, the dollar-won exchange rate fell to the 1497 won line. The dollar index surged to the 101 level as Middle East risks intensified again, but expectations that large-scale dollar assets would enter the domestic foreign exchange market due to the inflow of SK Hynix's ADR public offering proceeds worked in favor of the won.
However, the rate climbed back above 1500 won in the afternoon as the KOSPI widened its losses and the scale of foreign net selling increased. The rate recorded 1503.4 won at 3:30 PM, up 2.0 won from the previous trading day's closing price at 3:30 PM.
KOSPI Falls Nearly 9% With Circuit Breaker Triggered and Foreign Selling at 1.7 Trillion Won
The KOSPI plunged nearly 9% to the 6800 level on the day. A sell-side sidecar and circuit breaker were triggered in succession during the session. The scale of foreign net selling on the KOSPI, which had been quiet for the past three trading days, rose back to the 1.7 trillion won range.
The stock market's sharp decline affected the exchange rate, but experts are detecting a shift in the supply-demand atmosphere in the foreign exchange market recently. In addition to expectations of SK Hynix's ADR capital inflow, Hanwha Ocean increased its currency hedging by selling $2 billion worth of forward foreign exchange on the 10th. There are also expectations that active capital inflows following inclusion in the WGBI (World Government Bond Index) will begin in earnest once the war situation is resolved.
Korea Investment & Securities Analyst Forecasts Potential Rate Inflection Point
Moon Da-woon, a researcher at Korea Investment & Securities, stated, "If expectations shift toward a decline in the exchange rate, all positions could suddenly reverse and the rate could plunge rapidly." He added, "While it is difficult to predict when and with what event the expectations for a rising exchange rate will be clearly broken amid overlapping news of various dollar supplies, the possibility of forming an inflection point in exchange rate expectations is high as movements have begun centered on the government and major companies."
FAQ
Why did the dollar-won exchange rate rise above 1500 won in the afternoon?
The rate climbed back above 1500 won as the KOSPI widened its losses to nearly 9% and foreign net selling on the KOSPI increased to 1.7 trillion won scale in the afternoon session.
What triggered the circuit breaker on the KOSPI?
The KOSPI plunged nearly 9% intraday to the 6800 level, causing a sell-side sidecar and circuit breaker to be triggered in succession during the session.
What supply-side factors are analysts monitoring for the exchange rate?
Analysts are monitoring SK Hynix's ADR capital inflows, Hanwha Ocean's $2 billion forward FX sale on the 10th, and potential WGBI-related active capital inflows once geopolitical risks subside.
