Exchange Rate Drops to the 1,410 Won Level... Dollar Inflows Drive Decline (Update)
Weekly Close at 1,416.1 Won on August 7, Down 7.7 Won
Lowest Level in 10 Months
Improved Supply and Demand as SK hynix ADR Listing Brings Dollar Inflows
Exporters’ Dollar Sales Also Contribute to Market Improvement
The KRW/USD exchange rate closed at the 1,410 won level for the week’s trading close for the first time in about 10 months. This was due to improved supply and demand conditions as a significant inflow of dollars entered the domestic market.
On August 7, at the Seoul foreign exchange market, the KRW/USD exchange rate finished regular weekly trading (3:30 p.m.) at 1,416.1 won, down 7.7 won from the previous trading day. This is the lowest level since October 2 of last year, when it closed at 1,400.0 won.
On this day, the KRW/USD rate rose to as high as 1,425.7 won at around 9:04 a.m., but then reversed course and fell below the 1,420 won mark. In the afternoon, it traded mostly in the upper 1,410s to low 1,420s, dropping to 1,415.9 won just before 3:30 p.m.
The KRW/USD rate reached the 1,410 won range during intraday trading the previous day as well. After holding at similar levels for two consecutive days, it has now ended the week in the 1,410 won range on a closing basis as well.
This continued stability in the KRW/USD rate for two straight days appears to be the result of a sustained influx of dollars related to the listing of SK hynix’s American Depositary Receipts (ADR), as well as large-scale dollar sales by exporters that have improved market supply and demand conditions.
However, continued net selling by foreign investors in the domestic stock market, as well as a rebound in international oil prices, are seen as limiting further declines in the exchange rate. On this day, foreign investors were net sellers of 858.1 billion won in the domestic stock market. As for international oil prices, October Brent crude futures on the ICE Futures Exchange rose 3.8% to settle at $82.49 per barrel.
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The dollar index (DXY), which represents the value of the U.S. dollar against the six major currencies, was up 0.002 to stand at 99.940.
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