The USD-KRW exchange rate fell to 1,478.40 won as of 3:30 PM on the 20th in Seoul foreign exchange market, down 0.10 won from the previous close of 1,478.50 won, marking the lowest closing level since May 11. The decline occurred despite Middle East geopolitical tensions as selling pressure from SK Hynix's American Depositary Receipt (ADR) listing dollar conversion dominated market dynamics. SK Hynix, which raised $26.5 billion (approximately 40 trillion won) through its ADR listing, continued selling dollars for domestic investment purposes. The won strengthened further as foreign investors net purchased 500 billion won in stocks amid KOSPI's 4.46% decline, reducing custodian dollar buying pressure. The dollar index fell to 100.68 during Asian trading hours, limiting dollar strength and creating room for won appreciation despite ongoing U.S.-Iran military tensions.
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SK Hynix ADR Conversion Drives Dollar Selling Pressure
SK Hynix's ADR listing dollar conversion emerged as the primary driver of the won's appreciation. The company raised $26.5 billion (approximately 40 trillion won) through its ADR listing and has been continuously selling dollars for domestic investment. The USD-KRW exchange rate opened at 1,490.00 won and spiked to an intraday high of 1,490.60 won before steadily declining throughout the session. The rate eventually fell below the 1,480 won level, reaching an intraday low of 1,477.00 won. The intraday trading range spanned 13.60 won. Export companies added to the selling pressure with follow-up negotiation volumes, while long-stop orders (buy position liquidations) accelerated the downward momentum.
Foreign Investors Net Buy 500 Billion Won in Stocks
Foreign investors net purchased 500 billion won in stocks on the securities market on the 20th despite the KOSPI's 4.46% decline to 6,516.27. The KOSDAQ fell 5.33% to 749.64. This foreign buying activity reduced custodian dollar purchasing pressure in the currency market. One bank foreign exchange dealer stated that "foreigners are coming back in as KOSPI falls" and "the supply-demand situation is good, so the dollar-won faced downward pressure." Trading volume in the spot currency market totaled $10.503 billion combined across Seoul Foreign Exchange Brokerage and Korea Money Brokerage.
Market Dealers Cite Supply-Driven Downward Pressure
A bank dealer explained that "SK Hynix supply continues, so the exchange rate seems to be flowing downward with supply dominance" and "although there are many import company settlement volumes at the lower end, market expectations themselves are heading downward." Another bank dealer noted that "the exchange rate fell easily as offers joined in a situation where bid pressure was weak" and "there is resistance around 1,480 won." The dealer added that "it doesn't seem to be going below the mid-1,470 won range immediately" and "supply-demand appears most important as there are no signs of Middle East conflict resolution." In the currency futures market, foreigners net sold approximately 71,000 dollar futures contracts, continuing large-scale net selling following 70,000 contracts on the 16th.
China PBOC Holds LPR Rates Unchanged at 3.0% and 3.5%
The People's Bank of China (PBOC) set the dollar-yuan trading reference rate at 6.7948 yuan, up 0.0014 yuan (0.02%) from the previous session. The PBOC kept its Loan Prime Rate (LPR), treated as a benchmark interest rate, unchanged across both medium and short-term tenors. The bank maintained the 1-year rate, which serves as the basis for general loans, at 3.0% and the 5-year rate, which functions as the benchmark for mortgage loans, at 3.5%. The Market Average Rate (MAR) was announced at 1,482.00 won. As of the same time, the dollar-yen exchange rate stood at 162.381 yen, with the yen-won cross rate at 910.51 won per 100 yen. The euro-dollar rate was 1.14364 dollars, and the dollar index showed 100.745. The offshore dollar-yuan (CNH) rate was 6.7737 yuan. The yuan-won direct trading rate closed at 218.10 won per yuan, with an intraday low of 218.10 won and high of 219.87 won.
FAQ
What caused the USD-KRW exchange rate to fall to 1,478.40 won on the 20th?
The USD-KRW exchange rate fell to 1,478.40 won as of 3:30 PM on the 20th, down 0.10 won from the previous close of 1,478.50 won, primarily due to SK Hynix's continued dollar selling from its $26.5 billion ADR listing proceeds for domestic investment purposes. Foreign investors' net purchase of 500 billion won in stocks further reduced custodian dollar buying pressure, while the dollar index fell to 100.68 during Asian trading hours.
How much did SK Hynix raise through its ADR listing?
SK Hynix raised $26.5 billion (approximately 40 trillion won) through its American Depositary Receipt (ADR) listing. The company has been continuously selling dollars in the foreign exchange market to convert these funds for domestic investment, creating sustained selling pressure that drove the USD-KRW exchange rate lower.
What did the People's Bank of China decide regarding its Loan Prime Rate?
The People's Bank of China (PBOC) kept its Loan Prime Rate (LPR) unchanged across both tenors on the 20th. The bank maintained the 1-year rate, which serves as the basis for general loans, at 3.0% and the 5-year rate, which functions as the benchmark for mortgage loans, at 3.5%.
