Won Rises Past 1,500 per Dollar Ahead of SK Hynix ADR Listing
Summary
- The won-dollar exchange rate fell below 1,500 won for the first time in more than 50 days, signaling a rise in the won's value.
- Expectations for as much as $30 billion in inflows tied to SK Hynix's ADR listing helped ease the market's one-sided bias toward dollar buying.
- Foreign investors turned into net buyers, and the exchange rate could fall into the mid-1,400 won range depending on the future Fed policy stance.
Forecast Trend Report by Period
Up to $30 Billion in Inflows Expected
Wave of Dollar Selling Hits Market
The won rose past 1,500 per dollar in intraday trading for the first time in more than 50 days. Expectations for dollar inflows ahead of SK Hynix Inc.'s American depositary receipt listing also boosted the Korean currency.
As of 3:30 p.m. in Seoul on July 8, the won was trading at 1,498.5 per dollar, 29.7 won stronger than the previous session in the Seoul foreign-exchange market. It was the first time the exchange rate had fallen below 1,500 won in daytime trading since May 14, when it stood at 1,491.0 won.
The move was partly driven by growing expectations of dollar inflows ahead of SK Hynix's ADR listing on July 10. Some analysts estimate as much as $30 billion could enter the foreign-exchange market, putting upward pressure on the won. SK Hynix is understood to be planning to convert dollar proceeds raised through the ADR listing into won soon after the sale.
The expectation also prompted long-stop orders, or dollar stop-loss selling, in the market. Lee Yoo-jung, a researcher at Hana Bank, said anticipated dollar inflows tied to the ADR listing had eased the market's one-sided bias toward buying dollars. Foreign-exchange authorities also appeared to have intervened. Earlier in the day, Deputy Prime Minister Koo Yun-cheol, who also serves as finance minister, said at a market situation review meeting that the government would significantly strengthen its 24-hour monitoring system to respond to potential volatility in the foreign-exchange market during overnight hours.
Foreign investors were also net buyers of about $687 million worth of local stocks on the day, helping push the exchange rate lower. It was their first shift back to net buying since June 18, about three weeks ago.
The foreign-exchange market is now watching whether the SK Hynix ADR listing will mark a turning point after the exchange rate's extended climb. Park Sang-hyun, a researcher at iM Securities, said the most important variable remains the Federal Reserve's monetary-policy stance. He said the won would move into the mid-1,400 range only after inflation stabilizes and expectations for further benchmark rate increases begin to fade.
Shim Seong-mi, Hankyung.com reporter smshim@hankyung.com
Korea Economic Daily
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