The won-dollar exchange rate is displayed on the digital display at Hana Bank’s headquarters dealing room in Jung-gu, Seoul on Dec. 26. (Captured from YTN)
The won-dollar exchange rate fell to the 1,430 won range during trading on Dec. 26, boosted by foreigners’ net purchases of over 1 trillion won in the domestic stock market. This is the first time the exchange rate has dropped to the 1430 won range during trading since Nov. 4, approximately a month and a half ago.
On Dec. 26, the daytime closing price of the won against the U.S. dollar in the Seoul foreign exchange market (as of 3:30 p.m.) was recorded at 1,440.3 won, down 9.5 won from the previous trading day.
The exchange rate showed volatile market conditions. The won-dollar exchange rate, which opened at 1,449.9 won, up 0.1 won from the previous trading day’s closing price, rose to 1,454.3 won in early trading but then turned downward, falling to 1,429.5 won at 11:35 a.m. before trading in the early 1430 won range at 1:00 p.m. The daily fluctuation range exceeded approximately 20 won.
The exchange rate fell as foreigners purchased over 1 trillion won in the domestic stock market on Dec. 26, amid the government’s comprehensive foreign exchange market stabilization measures.
Earlier on Dec. 24, foreign exchange authorities issued high-intensity verbal intervention messages and announced exchange rate stabilization measures, including tax benefits for retail investors returning to domestic stocks from overseas investments. Following this, the exchange rate, which had soared to the 1,480 won range at the beginning of the week, plummeted to the 1,440 won range. Some speculate that foreign exchange authorities may have also conducted actual intervention.
Lee Min-hyuk, an economist at KB Kookmin Bank, said, “We cannot know whether foreign exchange authorities conducted additional actual intervention (today),” but added, “The exchange rate appears to be falling due to foreigners’ purchases of domestic stocks and dollar selling by major investment entities based on expectations of exchange rate decline.” In the market, observations continue that the National Pension Service’s strategic currency hedging could lead to full-scale large-scale dollar selling.
