"USD May Drop to 1,350 Won" — Why the Securities Industry Expects Further Decline [Weekend Money]

"Surplus of Dollar Supply Expected to Continue"
Shareholder Returns by Samsung and SK hynix Also a Factor
Foreign Investors Likely to Return... Concerns Over 'Seohak Ants'

The exchange rate, which climbed to 1,561 won in June, has now fallen below 1,400 won. This is the first time such a level has been seen since September 29 of last year. According to the securities industry, the downward trend driven by supply-demand factors is expected to take the USD/KRW exchange rate down to 1,350 won.

Park Sanghyun, a researcher at iM Securities, stated, "The primary reason behind the continued strength of the won, that is, the ongoing USD/KRW trend even in the face of external negative factors or uncertainties, is the supply of dollars," adding, "Unlike the first half of the year, the current surplus of dollar supply in the second half is driving a sharp decline in the USD/KRW exchange rate, and the foreign exchange market expects this supply advantage to persist for the time being."

On the 20th, the KOSPI index started the trading session at 6680.34, up 209.17 points from the previous trading day. The domestic stock market index is displayed on the electronic board in the Hana Bank dealing room in Jung-gu, Seoul. As of 9:05 AM, the won-dollar exchange rate was 1,389 won, down 8.7 won from the previous day's weekly closing price. Photo by Kang Jinhyung, August 20, 2026

The main reason for this anticipated surplus in dollar supply is the large-scale shareholder returns by Samsung Electronics and SK hynix. These companies are expected to convert their dollar holdings into won as part of their shareholder return policies. Park noted, "In fact, on the 19th, SK hynix announced plans to enhance shareholder value by acquiring and retiring 40 trillion won worth of treasury shares. In addition to this, there is also demand for foreign exchange conversions in anticipation of interim corporate tax payments scheduled for the end of August, as well as the government’s efforts to secure investment funds for three major mega projects — all of which increase the volume of dollar conversion."

The significant increase in the nation's trade surplus is also having a major impact on dollar supply. From January to July of this year, the cumulative trade surplus has reached 167.8 billion dollars. Park explained, "Given that the monthly trade surplus exceeded 30 billion dollars in both June and July, it is highly likely that the annual trade surplus will surpass 360 billion dollars this year," and noted that "this would be nearly four times larger than the previous record annual trade surplus of 95.2 billion dollars set in 2017."

Additionally, expectations for increased forward dollar selling, centered on some shipbuilders and public pension funds, as well as the easing of net selling by foreign investors in Korean stocks, were also cited as reasons for the supply surplus of dollars.

With these factors in play, further declines in the USD/KRW exchange rate are considered possible. Park stated, "Another factor supporting expectations for a further decline in the exchange rate is the possibility that the United States and Japan may continue policies aimed at strengthening the yen to stabilize their government bond markets," adding, "As a result, despite some persistent risks and uncertainties, we expect the USD/KRW exchange rate to fall to the 1,350 won range."

A decline in the USD/KRW exchange rate is also expected to enhance the attractiveness of Korea to foreign investors. Park remarked, "Since surging exchange rates have served as a significant barrier or risk for foreign investors in Korean stocks and bonds, the current strength of the won could drive expanded foreign investment in both markets through the year-end."

However, this positive trend is accompanied by the side effect of an increase in so-called ‘Seohak Ants’ — domestic investors turning to U.S. stocks. With volatility in the local stock market and the additional drop in the exchange rate, this movement is likely to accelerate. Park added, "Reduced currency conversion costs will serve as a catalyst for expanding Seohak Ants investing."

Nonetheless, Park emphasized, "While the impact of a weaker USD/KRW exchange rate on the domestic economy and financial markets may be mixed, the fact that the exchange rate reflects the fundamentals of the Korean economy suggests that the positive effects are likely to outweigh the negative ones."

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