FX Authorities Step In, National Pension Hedging Weighs on Market... Exchange Rate Closes Down 22.9 Won (Update)

Closed at 1,512.1 won, down 22.9 won from the previous day

On June 9, the KRW-USD exchange rate fell by nearly 23 won, dropping to the 1,510-won level. This decline was driven by strong signals from the foreign exchange authorities expressing a commitment to stabilize the market after the weekend, combined with the National Pension Service’s increased demand for currency hedging, which further dampened market sentiment.

On the 9th, the KOSPI, KOSDAQ, and KRW-USD exchange rates were displayed on the status board in the dealing room of Hana Bank in Jung-gu, Seoul. Photo by Yonhap News

The KRW-USD exchange rate ended weekly trading (as of 3:30 p.m.) at 1,512.1 won, down 22.9 won from the previous trading day. This is the lowest level since June 1 (1,504.3 won). The magnitude of the drop was the largest in about two months, since the 33.6-won decrease recorded on April 8.

On this day, the exchange rate opened at 1,529.4 won, down 5.6 won from the previous weekly closing price. By 9:27 a.m., the decline had narrowed to 1,533 won. However, immediately after reaching the intraday high, the rate plunged sharply, fluctuating around 1,520 won before extending its decline to fall as low as 1,509 won by around 3 p.m., at times dipping below the 1,510-won level.

The foreign exchange authorities’ continued statements of commitment to market stability after the weekend influenced the day’s decline. At the emergency market monitoring meeting of the heads of foreign exchange and financial authorities (F4) on June 7, a message was issued warning that strict measures would be taken against speculative trading. On June 8, as the exchange rate surged past 1,550 won during trading for the first time in about five months, verbal intervention was made by the Bank of Korea and the Ministry of Economy and Finance directors. On the same day, the Financial Services Commission convened domestic and foreign bank branches, emphasizing a focused inspection of speculative trading and market-disrupting activities. The Ministry of Economy and Finance also announced that, in the afternoon, relevant agencies would soon begin on-site inspections and audits in the foreign exchange market to check for speculative trading or market disruptions.

The National Pension Service’s demand for currency hedging also appears to have contributed to the decline in the exchange rate. Additionally, selling by exporters flowed into the market. External factors also played a role. After U.S. President Donald Trump stated that "both Israel and Iran are seeking an immediate ceasefire," both Iran and Israel announced a halt to airstrikes. The dollar index, which measures the value of the U.S. dollar against the currencies of six major countries, dropped to 99.863 as of 3:30 p.m.

The KOSPI, which had plunged the previous day, recorded its largest-ever single-day gain and recovered the 8,000-point level. On this day, the KOSPI closed at 8,096.93, up 612.52 points (8.18%) from the previous day. While foreign investors engaged in net selling amounting to trillions of won, institutional investors showed strong net buying, with purchases nearing 2.2 trillion won.

This content was produced with the assistance of AI translation services.