Won Weakens Past 1,530 Per Dollar for First Time Since March 31

Rose above 1,520 in overnight trading the previous day

The won weakened past 1,530 per dollar in intraday trading on June 4 for the first time since March 31.

At 9 a.m. in Seoul, the won-dollar exchange rate opened at 1,530 won per dollar, up 13.6 won from the previous session, and continued to climb. It was the first time since March 31 that the exchange rate had moved above 1,530 won during regular trading. In overnight trading the previous day, it also rose past 1,520 won, the highest intraday level since the night trading system was introduced 1 year and 11 months ago.

The won's decline was attributed to higher oil prices as Middle East risks resurfaced. Earlier that day, Iran's Islamic Revolutionary Guard Corps said it had attacked a US Air Force base in Kuwait and the US Navy's Fifth Fleet base in Bahrain in response to strikes on an Iranian tanker and a communications tower on Qeshm Island.

Brent crude futures for August delivery, the global benchmark, settled 1.9% higher at $97.81 a barrel on ICE Futures Europe. West Texas Intermediate futures for July delivery closed up 2.4% at $96.02 a barrel on the New York Mercantile Exchange.

Foreign investors' selling of Kospi stocks also added to pressure on the won. Foreigners were net sellers on the main board for 18 straight trading sessions from May 7 through June 2. Their net selling totaled about 60 trillion won over that period. They were also net sellers of more than 2 trillion won early on June 4.

"Uncertainty over ceasefire talks expanded after Iran's strike on Kuwait, fueling broader risk aversion," Kim Ji-na, an analyst at Eugene Investment & Securities, said. Foreign investors' net selling in the Kospi is also widening again, she added. "The won is unlikely to recover until Middle East risks are resolved."

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com