The Korean won posted the highest appreciation rate against the US dollar among major currencies this month. From July 1 to 15, the won appreciated 4.32% versus the dollar, outpacing G10 currencies and emerging market peers. The strengthening reflects improved supply-demand conditions as foreign investor stock selling subsided and dollar inflows surged from SK Hynix's American Depositary Receipt listing. Earlier this year, the won faced downward pressure from US-Iran conflict tensions and foreign investors' profit-taking stock sales amid a domestic equity market rally.
Won Appreciation Outpaces G10 and Emerging Market Currencies
According to Yonhap Infomax currency comparison data, the won's appreciation rate from July 1 to 15 was +4.32%. This surpassed G10 currencies including the euro, yen, pound, Australian dollar, Canadian dollar, and New Zealand dollar, which posted appreciation rates in the 0-3% range during the same period.
The won's gains also stood out against emerging market currencies. The Indian rupee depreciated 1.05% and the Indonesian rupiah fell 0.58%. Taiwan's dollar, from an economy with a structure similar to Korea's, declined 0.82%.
Foreign Stock Selling Drops from June Peak
Foreign investors net sold 57 trillion won of Korean stocks in June, setting a new record. From July 1 to 15, net selling totaled 11 trillion won. In the most recent six trading days, foreign investors were net buyers on four days, raising expectations that rebalancing activity has concluded.
Citibank stated in a report on the 15th that "capital outflow pressure from foreign stock investors has eased due to the recent KOSPI correction" and "the KOSPI correction can also limit additional FX hedging from foreigners' non-deliverable forward purchases."
Corporate Dollar Selling Reaches 18-Year High
Major export companies increased dollar selling. SK Hynix, which raised $26.5 billion through a new share issuance and ADR listing, has been supplying FX conversion volume across both forward and spot markets. Shipbuilder Hanwha Ocean has been actively selling forward FX after recently raising its hedging ratio.
According to the Bank of Korea, domestic companies' net forward FX selling in the second quarter was $17.4 billion, the highest in 18 years.
BOK Rate Decision Expected
Observers suggest that if the Bank of Korea's Monetary Policy Board meeting on the 16th delivers a hawkish signal, it could provide additional support for the won. The market expects the BOK to raise the base rate by 25bp to 2.75%.
Mitsubishi UFJ Bank analyzed that "the possibility of a hawkish MPC decision, continued strong semiconductor industry conditions, and undervalued won valuation are contributing to the won's recent relative strength versus other regional currencies."
FAQ
What was the Korean won's appreciation rate against the US dollar from July 1 to 15?
The Korean won appreciated 4.32% against the US dollar from July 1 to 15, the highest rate among major currencies during that period.
How much did foreign investors sell in Korean stocks during June and early July?
Foreign investors net sold 57 trillion won of Korean stocks in June, setting a record. From July 1 to 15, net selling decreased to 11 trillion won.
