Won-Dollar Rate Opens at 1,518 as Markets Eye BOK Rate Path

The won-dollar exchange rate opened lower at the start of Seoul trading on June 12, retreating to the low-1,500 won range despite repeated flare-ups in Middle East geopolitical tensions. Markets are paying closer attention to the possibility of an additional Bank of Korea rate cut than to developments in the region.

The won-dollar rate opened daytime trading at 1,518 won per dollar, down 10.9 won from the previous session’s close of 1,528.9 won.

The decline came as appetite for risk assets recovered somewhat after U.S. President Donald Trump spoke of progress in nuclear talks with Iran. Trump said June 12 that negotiations with Iran had nearly reached the final stage.

Even so, the foreign-exchange market does not expect the won-dollar rate to fall into the 1,400 won range anytime soon. Foreign investors have continued to sell South Korean stocks, while the timing of any Federal Reserve rate cut remains uncertain.

Foreign investors were net sellers of 1.4026 trillion won ($1.02 billion) on the benchmark stock market the previous day, extending their selling streak to 24 consecutive trading sessions.

Markets are also watching for a shift in the Bank of Korea’s monetary policy stance. Gov. Rhee Chang-yong said June 12 that the central bank would judge interest-rate policy with a focus on the inflation path. The Bank of Korea had previously signaled the possibility of a benchmark rate cut, and markets are looking for another reduction in the second half of this year.