The USD-KRW exchange rate rose to 1,466.80 won at 11:05 AM on the 27th, up 0.20 won from the prior Seoul session close of 1,466.60 won and 8.30 won above the New York close of 1,458.50 won. The uptick was driven by bargain-hunting from importers after the rate had declined sharply in recent sessions due to sustained dollar inflows related to SK Hynix's American Depositary Receipt (ADR) listing. Foreign investors also sold 1.5 trillion won worth of equities in the securities market for a second consecutive session, stimulating custody-related dollar purchases and reinforcing upward pressure on the exchange rate.
USD-KRW Opens Lower Then Rebounds on Import Demand
The USD-KRW rate opened in the late 1,450 won range on the 27th but demonstrated strong support at lower levels. Import-side settlement demand dominated trading, pushing the rate back to the prior Seoul close. The intraday high reached 1,467.00 won at 10:54 AM. Market participants noted that the recent rapid decline in the exchange rate—driven by steady dollar inflows from SK Hynix's ADR listing proceeds—had created a perceived buying opportunity for importers seeking to purchase dollars at favorable levels.
Foreign Investors Sell 1.5 Trillion Won in Equities
Foreign investors extended their selling streak in the securities market, offloading 1.5 trillion won worth of shares for a second consecutive session. This sustained equity outflow triggered custody-related dollar buying, adding to upward pressure on the USD-KRW rate. The combination of import settlement demand and foreign equity divestment outweighed any residual downward pressure from SK Hynix ADR-related inflows.
US-Iran Tensions Show Signs of Easing
Geopolitical developments offered a backdrop of reduced risk. US Central Command (CENTCOM) Commander Brad Cooper recommended halting bombing operations around the Strait of Hormuz targeting Iran, stating that the effectiveness of such strikes had reached its limit, according to a report by Axios on the 26th. The easing of US-Iran tensions provided a less volatile external environment for currency markets.
Dealers Cite Bargain-Hunting After Recent Decline
A dealer at a commercial bank stated, "Given that the exchange rate level has dropped quickly recently, it appears that bargain-hunting buying is flowing in. Last week, when the rate fell to the early 1,460 won range, export-side negotiation volumes seemed to slow somewhat." Another dealer at a separate commercial bank added, "Since the rate has fallen by about 80 to 90 won in a short period, it is reasonable for bargain-hunting buying to enter at the current level. We need to monitor whether ADR-related flows have concluded, but with heavy foreign equity selling, settlement demand holds the upper hand in terms of supply and demand."
Regional FX Markets See Mixed Moves
The People's Bank of China (PBOC) set the yuan stronger on the morning of the 27th, with the USD-CNY reference rate fixed at 6.7911 yuan, down 0.0028 yuan (0.04%) from the prior session. The dollar index fell 0.33% to 101.130. USD-JPY declined 0.21% to 163.496 yen, while EUR-USD rose 0.40% to 1.14119 dollars. The JPY-KRW cross rate increased 0.75% to 897.10 won per 100 yen, and the CNY-KRW rate rose 0.58% to 216.71 won. Offshore USD-CNH edged down 0.04% to 6.7686 yuan.
FAQ
What caused the USD-KRW exchange rate to rise on the 27th?
The USD-KRW rate rose to 1,466.80 won at 11:05 AM on the 27th due to bargain-hunting by importers after a recent sharp decline driven by SK Hynix ADR-related dollar inflows. Foreign investors also sold 1.5 trillion won in equities for a second consecutive session, adding custody-related dollar demand.
How did foreign investor activity affect the USD-KRW rate?
Foreign investors sold 1.5 trillion won worth of shares in the securities market over two consecutive sessions. This sustained equity outflow triggered custody-related dollar purchases, which supported upward pressure on the USD-KRW exchange rate alongside import settlement demand.
What did dealers say about the recent exchange rate movements?
Dealers at commercial banks noted that the exchange rate had fallen by 80 to 90 won in a short period, making the current level attractive for bargain-hunting. One dealer observed that export-side negotiation volumes had slowed when the rate fell to the early 1,460 won range last week, while another stated that settlement demand currently holds the upper hand in supply and demand dynamics.
