Foreign Investors Return... Exchange Rate Drops to 1,350 Won for the First Time in 7 Months

Dollar Weakens Amid Intensifying U.S.-China Tensions

Down 126 Won from High in 2 Months

The KRW-USD exchange rate fell to the 1,350 won range for the first time in about seven months, supported by a weakening dollar and foreign investors’ stock buying.

On the 5th, the Seoul Foreign Exchange Market closed its weekly session with the KRW-USD rate down 11.10 won at 1,358.40 won. This is the lowest level in about seven months since October 14 last year (1,355.90 won). Compared to the yearly high in April (1,484.10 won), the rate has dropped by about 126 won in just over two months.

The Korean won started strong as the previous day’s U.S. private employment and service sector data came out weak. Heightened concerns over trade tensions between the United States of America and the People's Republic of China were also cited as factors for the dollar’s weakness.

Foreign investors’ stock buying in the Republic of Korea market further boosted the won’s strength. On this day, foreign investors made net purchases of roughly ₩919.9 billion on the KOSPI Market. This marks a third straight day of net buying, and for the second consecutive day, they bought stocks worth around ₩1 trillion, following the previous day's ₩1.0507 trillion.

The People's Bank of China’s appreciation of the Renminbi also had an effect. On this day, the People's Bank of China raised the reference exchange rate for the Renminbi to 7.1865 per the U.S. dollar, up 0.029% from the previous day.

As of 3:30 p.m., the Japanese Yen-U.S. Dollar rate was 143.23 yen, down slightly from the previous day (143.98 yen). The U.S. Dollar Index, which shows the value of the U.S. dollar against six major currencies, was 98.88, down from the 99 range the previous day.

Reporter Dongwook Jwa leftking@hankyung.com