The USD-KRW exchange rate fell sharply to 1,515.80 won as of 6 AM on the 8th, down 14.50 won from the prior trading day close of 1,530.30 won on the 6th, marking the first time the rate dropped below the 1,510 won level since June 18. The decline was driven by yen strength, concerns over dollar inflows tied to SK Hynix's American Depositary Receipt (ADR) listing, and remarks by Japanese Finance Ministry official Atsushi Mimura on Korea-Japan foreign exchange cooperation. This occurred against a backdrop of renewed geopolitical tensions in the Hormuz Strait, where a tanker was attacked by an unidentified drone on the 7th (local time), prompting the US Treasury to reinstate sanctions on Iranian oil by canceling a general license that had allowed sales until the 21st of next month.
USD-KRW Drops to 1,515.80 Won, Lowest Since June 18
In the foreign exchange market on the 8th, the USD-KRW rate traded at 1,515.80 won as of 6 AM, down 14.50 won from the Seoul market close of 1,530.30 won on the 6th. Compared to the price at 3:30 PM the previous day (1,528.20 won), the rate fell 12.40 won. The rate started at 1,528.90 won at 6 AM the previous day, rose to a high of 1,531.90 won at 9:33 AM, then reversed course and declined. During the Seoul trading session, the rate dropped as low as 1,519.50 won due to yen strength and concerns over dollar inflows from SK Hynix's ADR listing. Foreign investors net sold nearly 2.9 trillion won in stocks the previous day, yet downward pressure on the exchange rate remained stronger. After transitioning to the London session, the rate confirmed a low of 1,510.60 won following Atsushi Mimura's remarks on Korea-Japan FX cooperation and estimated smoothing operation volumes. However, the rate later pared some losses as tensions around the Hormuz Strait escalated again.
Hormuz Strait Drone Attack Triggers US Sanctions on Iranian Oil
The UK Navy's Maritime Trade Operations (UKMTO) announced on the 7th (local time) that a tanker passing through the Hormuz Strait "was attacked by an unidentified unmanned aerial vehicle (drone/UAV) and sustained minor structural damage." Iranian spokesperson Esmail Baghaei effectively acknowledged the attack, stating that "some merchant vessels used routes not coordinated with Iran and turned off or manipulated their Automatic Identification System (AIS) to evade detection by monitoring and safety systems." In response, the US Treasury reinstated sanctions by announcing the cancellation of the general license that had permitted the sale of Iranian crude oil and petroleum products for 60 days until the 21st of next month. Following these developments, Brent crude for September delivery closed at $74.16 per barrel, up 3.01% from the previous session.
Yen Strength and SK Hynix ADR Listing Pressure Exchange Rate
The dollar index, which reflects the dollar's value against six major currencies, rose back above 101. The three major US stock indices closed lower, and the Philadelphia Semiconductor Index fell 4.65%, influenced by Samsung Electronics' 6.92% plunge despite strong earnings the previous day. Overnight trading volume in USD-KRW remained modest, with $31 million transacted between 2 AM and 6 AM. The dollar index closed at 101.090. The USD-JPY rate fell to 161.991 yen, the EUR-USD rate declined to 1.14111 dollars, and the offshore USD-CNH rate rose to 6.8031 yuan.
FAQ
What caused the USD-KRW exchange rate to fall to 1,515.80 won on the 8th?
The rate dropped 14.50 won from the prior close due to yen strength, concerns over dollar inflows from SK Hynix's ADR listing, and remarks by Japanese Finance Ministry official Atsushi Mimura on Korea-Japan FX cooperation.
How did the Hormuz Strait incident affect oil prices?
After a tanker was attacked by a drone in the Hormuz Strait on the 7th (local time) and the US Treasury reinstated sanctions on Iranian oil, Brent crude for September delivery rose 3.01% to close at $74.16 per barrel.
