KRW/USD Exchange Rate Breaks the "Critical 1,400 Won" Mark for the First Time in 11 Months (Update)

Weekly Close on the 19th Records 1,397.7 Won
Down by 14.1 Won

The KRW/USD exchange rate has fallen to the 1,300 won range for the first time in 11 months since the end of September last year.

This is believed to be due to the growing expectations that the US Federal Reserve (Fed) will not raise its benchmark interest rate next month, a depreciation in the value of the dollar caused by concerns over the fiscal deficit, and a significant increase in selling pressure from foreign investors liquidating their dollar holdings.

On the 19th, the KOSPI, KOSDAQ, and KRW/USD exchange rates were displayed in the dealing room at the headquarters of Hana Bank in Jung-gu, Seoul. 2026.8.19 Photo by Yongjun Cho

On August 19 in the Seoul foreign exchange market, the KRW/USD exchange rate closed weekly trading (3:30 p.m.) at 1,397.7 won, down 14.1 won from the previous trading day. This marks the first time in 11 months, based on the weekly closing price, that the rate has entered the 1,300 won range since September 29 last year (1,398.7 won), and it is the lowest level since September 24 of the same year (1,397.5 won).

The exchange rate opened at 1,413.5 won at 9 a.m. that day, dropped below 1,400 won to 1,399.0 won around noon, and after some fluctuation, fell further to 1,396.0 won at around 3 p.m., ultimately closing the week in the 1,300 won range. After having surged due to factors such as the Middle East conflict, the KRW/USD exchange rate has been on a general downward trend since reaching 1,559.0 won on June 5.

The drop of the KRW/USD exchange rate into the 1,300 won range is attributed to the weakening US dollar, triggered by diminishing expectations for a Fed rate hike next month. Recently released US retail sales, Consumer Price Index (CPI), and Producer Price Index (PPI) figures all fell short of market expectations, reducing hopes for a rate hike in September. In addition, rising US Treasury yields due to concerns over the US fiscal deficit have fueled further dollar weakness, intensifying downward pressure on the exchange rate.

The Dollar Index, which measures the value of the US dollar against the currencies of six major countries, dropped by 0.19 points to 99.458.

Min Kyungwon, a researcher at Woori Bank, stated, "A few major foreign institutions have held aggressive short (sell) positions on the dollar, which seems to have driven the rate down consistently. In the process of testing whether the 1,300 won level would be breached, they intensified their short positions as it seemed likely to go lower."

Export companies are also believed to have contributed to the decline by increasing their dollar selling. While such settlements (negotiation-based sales) typically surge near the end of the month, there has been a continuous and steady stream of sales led by semiconductor companies lately, further strengthening the won.

In addition, the foreign exchange demand from foreigners, who net-purchased a total of 812.92 billion dollars in Korean stocks over five consecutive trading days up to the previous day, is considered to have contributed to the won's appreciation as their settlements were reflected with some time lag. In the domestic KOSPI market, foreigners turned net sellers for the first time in six days, offloading 3.5 trillion won on this day, but it is believed that they did not immediately convert these funds into foreign currency.

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