Search results
24 results
-
Bank of Korea Consulted Government Before Withholding Forex Reserves Ranking The Bank of Korea recently engaged in discussions with the government before deciding to withhold the international ranking of its foreign exchange reserves.According to a report by Yonhap News on September 30, the Bank of Koreas International Department discussed the removal of the foreign exchange reserves ranking from its press release on foreign exchange reserves at the end of August with the Ministry of Economy and Finance. However, no formal meeting was held.On September 3, the Bank of Korea announced that it had excluded the country-by-country foreign exchange reserves ranking from its monthly report without any explanation. This marks the first time in 25 years and six months that the Bank has not presented the ranking since it began providing related data in February 2001.While the foreign exchange reserves themselves increased significantly, South Koreas international ranking has dropped sharply this year, raising questions about the decision to remove the ranking. South Koreas foreign exchange reserves ranking fell from 9th place at the end of December last year to 10th at the end of January, 12th at the end of February, and 13th at the end of May, a decline of four positions in just five months.This decline is notably steep compared to the previous five years, during which South Korea consistently ranked between 8th and 9th in the world. The rise in the won-dollar exchange rate to its highest level since the financial crisis has led authorities to utilize foreign reserves to stabilize the market, which is cited as a reason for the drop in ranking.However, as of the end of June this year, South Koreas foreign exchange reserves ranking had rebounded to 10th place. The ranking for the end of July has not been disclosed, but it is reported to have remained at a similar level to the previous month.* This article has been translated by AI. September 30, 2026 -
U.S. Investment Project Moves Forward as Dollar Funding and Forex Management Loom The South Korean government is advancing the Texas combined cycle power plant as its first major investment in the United States, bringing funding and foreign exchange management to the forefront of its execution phase. While the government asserts that the project has commercial viability, it faces the immediate challenge of securing and remitting the necessary dollars, separate from the long-term recovery of the investment.On September 22, the government reported to the National Assemblys Finance and Economy Committee and the Industry, Trade, and Energy Committee on the investment plan and negotiation progress for the Texas power plant.With the decision on the first U.S. investment project, discussions have shifted from project selection and profitability assessments to the actual remittance amounts, timing, and funding methods, with the possibility of fund disbursement by the end of this month.After the briefing, Rep. Bae Jun-young, the finance and economy committees secretary from the ruling People Power Party, told reporters, There is an issue of needing to remit a significant amount of the investment by the end of September, and stated that follow-up measures would be verified at the National Assembly level.However, specific remittance amounts and schedules were not disclosed. Rep. Oh Gi-hyung, the finance committees secretary from the opposition Democratic Party, refrained from answering questions about the remittance scale, citing ongoing negotiations with the U.S. He also noted that there are variables regarding the timing of an official announcement.The government reported that the investment scale for the Texas power plant is $23.2 billion. It anticipates recovering between $43 billion and $45 billion over 20 years, deeming the project commercially viable.Under the strategic investment framework between South Korea and the U.S., the annual funding limit for the $200 billion U.S. investment is set at $20 billion. This structure means that the total investment for the first project will not be remitted all at once this year, nor will the annual cap be fully utilized in a single year.Consequently, the impact on the foreign exchange market will vary based on the actual timing of fund disbursement and the methods used to secure dollars, rather than the total investment amount. Utilizing already secured foreign currency assets differs from converting won to dollars in the domestic market, which affects foreign exchange supply differently. This is why the entire project scale cannot be interpreted as an immediate demand for domestic dollar purchases.Nevertheless, utilizing existing foreign currency assets does not eliminate the burden. As funds are tied up in long-term investments, liquidity and asset management for other foreign currency needs must also be considered. If funding is secured through bond issuance, factors such as interest rates, maturity, and the funds needed for interest payments become additional burdens.Institutional funding mechanisms are in place. According to the National Assembly Budget Office, foreign currency assets entrusted to the Bank of Korea and the Foreign Exchange Stabilization Fund can be utilized for the U.S. investment account of the Korea-U.S. Strategic Investment Fund. Issuing Korea-U.S. strategic investment bonds is also possible, but the government must obtain prior approval from the National Assembly to guarantee the repayment of the principal and interest.The time lag between the construction of the power plant and the revenue generated from its operation is also a management concern. The governments projected recovery amount over 20 years is a long-term outlook, and it is essential to separately assess when cash will be secured to cover initial payments and funding costs. Financial management must also account for potential delays in construction or revenue generation.If additional projects are initiated, there will be challenges in adjusting the timing of fund disbursement within the annual remittance limit. Depending on whether payments are concentrated at specific times or overlap with other foreign currency demands, the burden on the foreign exchange market may vary. Thus, alongside the profitability assessment of the first project, the overall investment schedule and foreign currency liquidity must be managed together.The National Assembly has also emphasized the need for oversight following project selection. Rep. Oh stated, As this is the initial stage of the project, continuous post-management and thorough monitoring are necessary, and requested that the concerns of committee members regarding national interests be adequately communicated during negotiations with the U.S. September 22, 2026
-
BOJ Warns of Forex Market Intervention as Yen Weakens Despite Rate Hike Despite the Bank of Japan (BOJ) raising its benchmark interest rate to 1.25% last week, the yen fell to around 158 yen per dollar, prompting the central bank to initiate a rate check in preparation for potential market intervention. This warning comes ahead of Japans five-day holiday from September 19 to 23, as the BOJ aims to curb the yens decline amid reduced trading volumes. Following the rate check, the yen-dollar exchange rate dropped by more than 1 yen within an hour.The Yomiuri Shimbun reported on September 21 that the BOJ conducted a rate check, inquiring about the exchange rate levels from financial institutions in the New York forex market on September 18. After this news broke, the yen-dollar rate, which had reached 158 yen, fell to the mid-156 yen range in a short time.A rate check is a procedure where forex authorities ask financial institutions about the yen-dollar exchange rate and trading conditions. It is often seen as a strong signal that the authorities are preparing to intervene in the market.Earlier, the BOJ decided to raise the benchmark interest rate by 0.25 percentage points to 1.25% during its monetary policy meeting on September 18. However, market analysts noted that the rate hike had already been priced in, and the BOJ did not provide clear signals regarding the pace of future rate increases. The opposition from two policy board members advocating for aggressive monetary easing also fueled speculation that further rate hikes would be slow. Consequently, selling pressure on the yen increased, leading to the yen-dollar rate rising to around 158 yen in the New York market on September 18.In response, the Nikkei reported that the BOJ conducted a rate check with multiple financial institutions. Following this, a wave of stop-loss yen-buying and dollar-selling orders emerged, causing the yen-dollar rate to drop by over 1 yen within an hour. A hedge fund representative in London told the Nikkei, The rate check was unexpectedly conducted at a level still far from the psychological barrier of 160 yen per dollar, making it quite effective. As of the morning of September 21, the yen-dollar rate was fluctuating in the mid-156 yen range in the Asian forex market.This rate check appears to be aimed at preventing further yen selling during the holiday period. Trading volumes in Japan typically decrease during holidays, leading to reduced market liquidity and potentially widening exchange rate fluctuations, which could accelerate the yens decline. A representative from a Japanese bank in New York commented to the Nikkei, They likely wanted to send a message to the market that they are wary of a sharp yen depreciation ahead of the holiday.The Japanese government and the BOJ have intervened in the forex market to buy yen and sell dollars twice this year, including an intervention that involved approximately 11 trillion yen during the holiday period from late April to early May. A rate check was also conducted prior to that intervention. There is a precedent for Japan intervening in the forex market during holiday periods in 2024, leading to speculation that this rate check could lead to actual intervention.Pressure on Yen RemainsHowever, some analysts argue that a rate check alone cannot reverse the yens downward trend. On September 18, long-term U.S. bond yields rose by 0.07 percentage points to reach the 5.0% range. Mark Chandler, chief market strategist at Bannockburn Global Forex, explained to the Nikkei, The yen is more sensitive to U.S. interest rates than to Japanese rates, and the rise in U.S. rates has led to yen selling and dollar buying. It is not surprising that the yen weakened despite the BOJs rate hike.The Yomiuri reported that the ongoing high U.S. interest rates, coupled with the uncertainty surrounding the timing of the BOJs next rate hike, are contributing to the pressure on the yen as the interest rate gap between the U.S. and Japan remains wide. A fund manager from a British asset management firm told the Yomiuri, To be honest, the rate check has little effect, adding that market participants are aware that forex market interventions or U.S. support cannot continue indefinitely, prompting them to sell the yen.Upcoming summits this week are also expected to influence exchange rates. U.S. President Donald Trump is scheduled to meet with Japanese Prime Minister Sanae Takai on September 22 in New York, followed by a meeting with Chinese President Xi Jinping in Washington on September 24. The Nikkei noted that the market is paying close attention to any comments from U.S. officials regarding Japans financial and forex policies, as U.S. Treasury Secretary Scott Vessenet has previously called for measures to correct the yens weakness.* This article has been translated by AI. September 21, 2026
-
Yen Falls Sharply Against Dollar Amid Speculation of Currency Intervention In just two days, the yen-dollar exchange rate plummeted by more than 5 yen, dropping from the low 160s to the mid-155s per dollar. This decline is attributed to growing expectations of accelerated interest rate hikes by the Bank of Japan (BOJ) and the possibility of the U.S. Federal Reserve maintaining its current rates this month, which could narrow the interest rate gap between the U.S. and Japan. Additionally, speculators who suffered losses from the joint yen-buying intervention at the end of July rushed to close their yen short positions, further amplifying the downward trend in the exchange rate. Although no actual intervention has been confirmed this time, concerns about potential intervention have prompted yen buying, leading to a short squeeze as the yen-dollar rate fell. Market sentiment suggests that the unwinding of yen carry trades has begun.According to the Nihon Keizai Shimbun (Nikkei), on September 3, the yen-dollar exchange rate fell to as low as 155.30 yen per dollar in the New York foreign exchange market, marking its lowest level in about a month. In the Tokyo market on September 4, the rate briefly dropped to 155.28 yen but rebounded to 156.10-156.12 yen by noon due to dollar buying from importers and other real demand. Compared to the previous day at 5 p.m., this represents a decrease of 0.93 yen.Nikkei identified the initial trigger for the sharp decline in the exchange rate as proactive dollar sales by investors anticipating intervention by Japanese authorities. A foreign exchange dealer from a Japanese bank noted that on September 2, there were reports that Japanese authorities had conducted a rate check with financial institutions to inquire about the exchange rate levels. As this speculation spread, the yen-dollar rate fell by about 1 yen in a short time, entering the 158 yen range. The rate then remained stable for a while.Michael Ashley Shulman, a partner at Serity Partners, explained, Many forex traders suffered losses from the joint U.S.-Japan intervention at the end of July. Because of that experience, when the rate rose to 160 yen per dollar this time, they bet on the possibility that authorities had already intervened and sold dollars. This proactive dollar selling led to further selling, and as the yen strengthened overnight in New York, yen buying intensified.The second critical point was the 158 yen level. On September 3, when the yen-dollar exchange rate fell below the 200-day moving average (MA) of 158.44 yen in the Tokyo market, the pace of decline accelerated. The 200-day moving average is a key indicator for investors assessing medium- to long-term market trends. A representative from a major European bank observed that leveraged investors who had built up yen short positions in anticipation of a weaker yen began to close their positions to mitigate losses after the breach of the 200-day line, leading to a significant short squeeze.The yen carry trade involves borrowing yen at low interest rates to invest in higher-yielding currencies or assets to profit from the interest rate differential. When the value of the yen rises, currency losses can offset interest income, prompting investors to buy back yen to close their positions. Typically, as investors increase their investment size through borrowing, significant fluctuations in the exchange rate lead to preemptive selling to avoid larger losses. According to the Commodity Futures Trading Commission (CFTC), as of August 25, leveraged funds net short positions in yen were more than double the average since 2020. Although these positions temporarily decreased right after the joint U.S.-Japan intervention at the end of July, they expanded again over the previous two weeks. A dealer from a Japanese bank in New York remarked, Considering the exchange rate levels at which positions were built, some investors may be holding unrealized losses.Changes in U.S.-Japan Monetary Policy OutlookThe shift in monetary policy expectations has also contributed to the decline in the yen-dollar exchange rate. Hajime Takata, a member of the BOJs Policy Board, emphasized during a press conference on September 2 that the situation has changed this year, suggesting the need for flexibility in determining the timing and magnitude of rate hikes, rather than adhering to the previous pattern of raising rates every six months by 0.25 percentage points. He mentioned that consecutive rate hikes are generally possible. The market is even discussing scenarios where the BOJ could raise rates every three months. Bloomberg reported on September 3 that the BOJ is likely to raise its policy rate by 0.25 percentage points to 1.25% at its monetary policy meeting on September 17-18.In contrast, the Yomiuri Shimbun reported that Christopher Waller, a member of the U.S. Federal Reserve, stated during a lecture on September 3 that recent indicators show signs of a slowdown in inflation, indicating that if this trend continues, there is no need to rush into rate hikes. Waller also expressed support for maintaining rates at the Federal Open Market Committee (FOMC) meeting on September 15-16 if inflation continues to ease. The probability of a rate hike in September, as reflected in the U.S. interest rate futures market, dropped from about 63% the previous day to around 50% on the morning of September 4 (Korean time). The expectation that the BOJ may raise rates while the Fed may delay its hikes has led investors to buy yen, anticipating a narrowing of the U.S.-Japan interest rate gap.Speculation that Japan may adjust its financial and fiscal policies under U.S. pressure has also spurred yen buying. The U.S. Treasury revealed on September 1 that Treasury Secretary Scott Vessen received a strong endorsement from BOJ Governor Kazuo Ueda on August 30 for Japan to take decisive market and monetary policy actions to address the significant undervaluation of the yen. Following this, there have been several comments from Ueda and BOJ officials hinting at potential rate hikes. The New York Times reported that during a meeting in Tokyo in May, Vessen expressed dissatisfaction for two hours with Prime Minister Sanae Takaichis aggressive fiscal stance and the BOJs insistence on maintaining low interest rates.It remains uncertain whether the recent sharp decline in the yen-dollar exchange rate will lead to a sustained strengthening of the yen. Hugo Monturiocchio, Chief Investment Officer at Schroders Multi-Asset, stated that recent interventions have only temporarily slowed the yens depreciation, and the appeal of the yen carry trade still exists, leading him to maintain yen short positions. He added, If the BOJ or the government sends a message indicating a desire for a stronger yen, it could lead to a trend reversal toward a stronger yen. Kit Jucks, a senior foreign exchange strategist at Societe Generale, noted, While the yen carry strategy of selling yen to capture interest income has worked until now, it is becoming riskier. There is a possibility that this could mark a turning point for the yen to appreciate to 140 yen per dollar over the coming years.The next critical moment will be the release of the U.S. non-farm payroll data for August on the night of September 4. If the employment figures are weak, expectations for a September rate hike in the U.S. may diminish further, strengthening the yen. Conversely, if the figures are stronger than expected, expectations for a U.S. rate hike may revive, potentially halting the decline in the exchange rate. Nikkei reported, citing a foreign exchange dealer from a Japanese bank, that whether the yen-dollar exchange rate can remain below the psychological resistance level of 155 yen per dollar, which has not been breached despite two interventions this year, will be crucial.* This article has been translated by AI. September 4, 2026 1
-
Hana Bank Opens Foreign Exchange Capital Transaction Center to Enhance Forex Services Hana Bank announced the opening of its Foreign Exchange Capital Transaction Center in Samsung-dong, Seoul, on August 12, aimed at strengthening its competitiveness as a foreign exchange specialist bank and responding to diverse global financial demands.The Foreign Exchange Capital Transaction Center is a dedicated organization established to provide specialized foreign exchange services for foreign direct investment (FDI), overseas direct investment, and overseas securities acquisition.Hana Bank plans to offer a one-stop foreign exchange service that supports complex foreign exchange capital transactions quickly and systematically, leveraging its collaborative network with major law firms and accounting firms.The center will also provide specialized financial services for expatriates and returning overseas Koreans. It aims to offer tailored financial services throughout the entire process of overseas relocation, including remittances for overseas relocation expenses, acquisition of overseas assets, foreign exchange reporting, and settling funds after returning to Korea.Hana Bank President Lee Ho-sung stated, Through the Foreign Exchange Capital Transaction Center, we will provide faster and more professional financial solutions for complex foreign exchange transactions, establishing ourselves as a leading foreign exchange specialist bank. August 12, 2026 08:
-
Yen Faces Pressure Again as Dollar Rises to 159 Yen, Threatening 160 Yen Mark Following the coordinated currency intervention by the United States and Japan, the yen has risen to around 159 yen per dollar, threatening to breach the 160 yen mark. The effects of the intervention have diminished by more than half in just one week. Although speculative selling of the yen has significantly decreased, the continued demand for dollars for oil imports and the slow return of overseas profits to Japan are contributing to the yens weakness.On the morning of August 11, the yen-dollar exchange rate was trading at approximately 159.16 to 159.18 yen per dollar in the Tokyo foreign exchange market. Earlier, on August 10, the rate also briefly rose above 159 yen in the New York foreign exchange market. The yens value has dropped to its lowest level since the U.S.-Japan intervention at the end of last month.Before the intervention on July 30, the yen-dollar exchange rate was around 162.80 yen per dollar, but it fell to about 155.20 yen on August 3, marking a decline of 7.60 yen in just three days. However, within five trading days, more than half of that decline has been reversed. From a technical perspective, the current exchange rate falls within the so-called 50% retracement zone, a critical juncture that could determine future market trends. If this level is surpassed, market attention will shift to whether the post-intervention decline can be fully reversed.Charts also reveal the limitations of the intervention. The 200-day moving average, which reflects the medium to long-term trend based on the average closing prices over the last 200 trading days, serves as a benchmark for trading and stop-loss orders. This time, it has acted as a barrier to yen appreciation. The yen-dollar exchange rate fell below the 200-day moving average immediately after the intervention but failed to stabilize at that level and has since risen again. The Nihon Keizai Shimbun noted on August 11 that the intervention has not changed the trend of yen depreciation. Christopher Rupkey, chief economist at FWDBONDS, stated that with the forex market expanding and trading capital increasing, intervention alone is insufficient to change the direction of the exchange rate.However, the intervention has not been entirely ineffective. According to the U.S. Commodity Futures Trading Commission (CFTC), the net short position in yen held by non-commercial entities, including hedge funds, decreased by 70% to 45,473 contracts as of August 4, marking the largest weekly decline on record. Mark Chandler, chief market strategist at Bannockburn Global Forex, remarked that the intervention successfully pressured speculators to cover their short positions in yen. Nevertheless, the yen has weakened again, as the Nikkei attributed this to persistent dollar buying by Japanese importers and other real demand.Japans Record SurplusJapans international balance of payments data reveals a structure where the current account surplus does not lead to yen buying. According to statistics released by the Japanese Ministry of Finance on August 10, the current account surplus for the first half of the year reached 17.4292 trillion yen (approximately $154.8 billion), a 22.5% increase from the same period last year, marking the highest surplus on record for the first half of the year. Increased exports of automobiles to the U.S. and electronic components to Asia contributed to a trade surplus of 742.1 billion yen, the first surplus for the first half of the year since 2021.Typically, a current account surplus generates demand for converting foreign earnings into yen, which would strengthen the currency. However, the average yen-dollar exchange rate for the first half of the year was 158.24 yen per dollar, up about 10 yen from 148.54 yen during the same period last year. Thus, while the surplus has accumulated, the value of the yen has actually declined.The primary driver of the current account surplus was the primary income balance, which reflects dividends and interest received by Japanese companies from their overseas subsidiaries, amounting to 20.4914 trillion yen, the highest on record for the first half of the year. The issue is that a significant portion of these earnings does not return to Japan. Of the 15.9083 trillion yen in foreign direct investment during the first half of the year, over 40%, or 6.5086 trillion yen, was reinvested in overseas subsidiaries. Shotaro Kugo, a senior researcher at the International Monetary Fund, noted that the lack of yen buying demand corresponding to the absolute size of the current account surplus is due to the reinvested earnings remaining abroad.In contrast, foreign direct investment in Japan amounted to 4.2623 trillion yen, falling short of 30% of Japans outbound direct investment. Including securities investments, a total of 18.4893 trillion yen flowed out of Japan through the financial account in the first half of the year. Typically, a weaker yen would lead to increased domestic investment over foreign investment, creating yen buying demand that could mitigate yen depreciation. However, Japans potential growth rate remains around the mid-0% range, and there is a labor shortage. Koya Miyamae, a senior economist at SMBC Nikko Securities, stated that domestic supply constraints, such as labor shortages, hinder adjustments through exchange rates.Recent increases in oil prices are also intensifying pressure on the yen. The Iran-aligned Houthi forces in Yemen attacked Saudi oil facilities with drones, raising uncertainties surrounding energy transport. On August 10, West Texas Intermediate (WTI) crude oil futures briefly rose to around $82 per barrel. Japan, which heavily relies on resource imports, sees an increase in dollar demand from importers when oil prices rise, leading to a decline in the yens value. In fact, the current account recorded a deficit of 92.3 billion yen in June, marking a return to negative territory for the first time in 17 months. The increase in import costs due to turmoil in the Middle East led to a 24.3% rise in import amounts compared to the same month last year, and the yen-denominated price of crude oil imports reached 117,684 yen per kiloliter, an 84.7% increase, the highest since 1979.With investment earnings remaining abroad, stagnant foreign direct investment in Japan, and the burden of rising oil import costs, there are numerous reasons to sell yen. While the intervention may provide temporary relief, reversing this trend is challenging. Consequently, there is a growing recognition of the need for financial policy measures beyond intervention. The U.S., which unusually participated in yen buying at the end of last month, is also publicly supporting financial policy measures to correct the undervaluation of the yen. U.S. Treasury Secretary Scott Vessenet stated on X (formerly Twitter), We strongly support financial measures to correct the significant undervaluation of the yen.Calls for Early Rate Hike by Bank of JapanTo prevent the entrenchment of yen depreciation, calls for an early interest rate hike are growing within the Bank of Japan (BOJ). In the minutes from the July monetary policy meeting released on August 10, several policymakers expressed a proactive stance on early rate hikes. One member noted that the pace of rate increases could be faster than market expectations. According to Dotani Research, the probability of a rate hike in September reflected in the interest rate swap market has risen to 67%.Kazuo Monma, a former BOJ director and executive economist at Mizuho Research Institute, stated, It has become difficult for the government to restrain the BOJs interest rate hikes. This is due to the Takaiichi Sanae administrations emphasis on U.S.-Japan relations, making it challenging to disregard the U.S. desire for yen stability. The market has already begun to factor in a scenario where the current policy rate of 1.0% could rise to around 1.5% between this winter and next spring.However, there is a variable this week. While there are concerns that intervention alone cannot change the trend of yen depreciation, Japans Obon holiday, similar to Koreas Chuseok, begins on August 13, coinciding with the U.S. summer vacation period, leading to reduced trading volumes. This could result in significant fluctuations in the exchange rate, as even small amounts can sway the market. If the yen surpasses 160 yen per dollar, the likelihood of further intervention by authorities increases.* This article has been translated by AI. August 11, 2026 16:
-
Companies Accumulate Dollars as Exchange Rates Rise Amid Forex Market Drought The foreign currency market is experiencing a paradox where there is an abundance of dollars, yet they are difficult to obtain in the forex market. This discrepancy is attributed to export companies holding onto dollars in foreign currency deposits instead of converting them to won, which is limiting the supply of dollars in the spot exchange market. Experts suggest that expectations of high exchange rates are encouraging companies to retain their dollar holdings.According to the Bank of Korea on July 14, corporate dollar deposits increased from $81.93 billion in January to $80.04 billion in April and $82.99 billion in May, after a decline to $72.71 billion in March. In contrast, personal dollar deposits decreased from $14.4 billion to $12.57 billion during the same period.The contrasting trends in dollar holdings between corporations and individuals indicate that the increase in foreign currency deposits is primarily driven by businesses. In March, corporate dollar deposits temporarily fell due to payments in won to domestic suppliers and corporate tax obligations, but they quickly rebounded, surpassing early-year levels by May. This suggests a strengthened inclination among companies to hold dollars this year.Analysis indicates that export companies are opting to keep dollars in foreign currency deposits rather than converting them to won, resulting in a reduced supply of dollars in the spot exchange market. This phenomenon is evident in the differing conditions of the foreign currency funding market and the forex market. While transactions involving borrowing dollars against won collateral are active in the foreign currency funding market, leading to favorable dollar procurement conditions, the forex market continues to face a shortage of dollars, keeping the won-dollar exchange rate elevated. Last month, the rate approached 1,560 won, and it has remained in the high 1,490s this month.Moon Da-woon, a researcher at Korea Investment & Securities, stated, The premium reflected when borrowing dollars in the foreign currency funding market has dropped to historical lows, even turning negative. While dollars are not scarce in the foreign currency funding market, there is a shortage in the forex market, causing exchange rates to surge. Experts analyze that expectations of continued high exchange rates are further increasing corporate dollar holdings. As foreign investment funds experience net outflows due to profit-taking from rising stock prices and rebalancing, the supply-demand dynamics are leading to a dollar shortage. Companies anticipating rising exchange rates are delaying dollar sales, which is intensifying actual upward pressure on exchange rates. This cycle is exacerbated by a trend of reducing currency hedging and increasing dollar holdings, further decreasing the influx of dollars into the forex market.Looking ahead, there are indications that factors prompting companies to sell dollars may increase in the second half of the year, potentially allowing some liquidity to flow into the spot exchange market. Factors such as large-scale forward sales by Hanwha Ocean, inflows from SK Hynix American Depositary Receipts (ADRs), increased dollar inflows due to strong semiconductor exports, and demand for currency exchange for corporate tax prepayments are all cited as potential contributors to increased dollar supply. In fact, the recent drop in the exchange rate to the high 1,490s has been attributed to the effects of SK Hynix ADR conversion volumes.Moon added, The governments foreign exchange supply and demand measures are gradually working to alleviate the supply-demand imbalance. Accordingly, adjustments in supply and demand are expected to emerge, leading to a gradual decline in expectations regarding exchange rates. * This article has been translated by AI. July 14, 2026 15:32
-
Increase in Foreign Investment Leads to Rise in Individual Forex Regulation Violations The number of individuals penalized for failing to comply with reporting obligations during overseas investments and real estate transactions has increased for the fourth consecutive year. While the total number of violations of foreign exchange regulations decreased compared to the previous year, individual violations rose.According to the Financial Supervisory Service on July 14, the total number of foreign exchange regulation violations last year was 1,072, down by 65 from 1,137 the previous year. Among these, 629 cases resulted in fines, 350 received warnings, and 93 were reported to investigative agencies.By type of violator, corporations accounted for 631 cases, or 58.9%, while individuals represented 441 cases, or 41.1%. The number of individual violations has increased from 317 in 2022 to 341 in 2023, 386 in 2024, and 441 last year.In terms of transaction types, violations related to overseas direct investment were the most common, totaling 478 cases, or 44.6% of the total. This was followed by 161 cases of monetary loans, 97 cases of overseas real estate transactions, and 88 cases of securities trading.The most common violation was the failure to report new transactions, which accounted for 577 cases, more than half of the total. There were also 372 cases where individuals did not report changes in investment amounts, maturities, or ownership names. Additionally, there were 99 cases of failure to report after-the-fact.The Financial Supervisory Service explained that even if the investment amount is as low as $1 or if retained earnings are converted to capital without actual fund movement, the obligation to report still applies. Changes in the name of the local corporation, investment amount, location, or share transfers also require updated reporting. For overseas real estate, if a property is initially reported as jointly owned but later acquired solely, prior notification of the change is necessary. After selling real estate, a disposal report must be submitted within three months, in principle.* This article has been translated by AI. July 14, 2026 12:08
-
FX Dealers Assess 24-Hour Forex Market Launch The domestic won-dollar forex market has entered a 24-hour trading system for the first time in history, launching without significant disruption. Current FX dealers report that while trading volume during the early morning hours remains limited, the initial shock of opening has lessened, and exchange rate volatility is expected to decrease.On July 7, a forex dealer at a major bank told Aju Economy in an interview, The closing price of the offshore non-deliverable forward (NDF) last night and the opening price in the domestic market at 6 a.m. showed almost no difference, adding, The effect of reduced volatility at the opening was noticeable.He began his shift at 6 a.m. that day, taking over from the overnight team. Despite overseas events such as the release of the U.S. services purchasing managers index (PMI), there was no significant shock to the market. He noted, There was more trading in the regional spot market than expected, and the volume of trades covered by NDF has decreased significantly. Although trading was not very active due to the initial implementation of the system, the market moved calmly.Since July 6, the domestic won-dollar forex market has transitioned to a 24-hour system, operating from 6 a.m. on Monday to 6 a.m. on Saturday, excluding weekends and January 1. This change moves away from the previous system that operated primarily from 9 a.m., aligning trading conditions with global forex market trends.Lee Seok-jin, a forex dealer at Hana Bank who worked the 6 a.m. shift on the first trading day, stated, Previously, it was routine to check the NDF market flow in preparation for the 9 a.m. opening, but now we are actually conducting spot forex trading from 6 a.m., which has changed our work approach entirely.Trading between 6 a.m. and 9 a.m., which attracted significant interest from market participants, proceeded in a relatively calm atmosphere. The dealer remarked, On the first day, participants were more inclined to observe the market rather than actively trade. Although the trading volume was not high, the bids were more tightly formed than expected, indicating that market functions were operating stably.He added, While it may not be easy to see a significant increase in trading volume immediately, as participation from foreign investors and import-export companies gradually expands, liquidity will naturally increase, especially with the establishment of the won payment system in the second half of the year.The market is also anticipating changes in exchange rate movements. Previously, events occurring in overseas financial markets, such as New York, would be reflected all at once at the domestic markets opening at 9 a.m., often leading to increased volatility right after opening. However, with trading now continuing from 6 a.m., materials that arise overnight are expected to be reflected in prices sequentially, increasing the likelihood of continuous exchange rate movements.The dealer explained, In the past, significant events in the U.S. overnight would often cause the exchange rate to spike or plummet right at the 9 a.m. opening. Now, with trading occurring in the early morning, the exchange rate is likely to move more continuously, and the initial volatility at opening may gradually ease.However, he anticipates that an adjustment period for the market is inevitable. He stated, Market participants are still in the process of adapting to the new trading hours, and the true benefits of a 24-hour forex market will only be realized as trading builds up and foreign investor participation increases.Forex authorities also assessed that the market operated stably on its first trading day. A Ministry of Economy and Finance official remarked, In the initial phase, it is more important to ensure the system is securely established than to increase trading volume, and we expect market participation to gradually expand on a stable operational foundation.* This article has been translated by AI. July 7, 2026 16:36
-
South Korea's Forex Market Shifts to 24-Hour Trading System South Koreas foreign exchange market has transitioned to a 24-hour trading system for won-dollar transactions. Major international media outlets have described this move as a symbolic change reflecting the opening of the financial market. However, concerns have been raised that extended trading hours could increase exchange rate volatility amid a continuing depreciation of the won. As of July 6, South Korea has expanded the trading hours for won-dollar transactions to 24 hours during the week. The new schedule allows trading from 6 a.m. on Monday to 6 a.m. on Saturday. The Wall Street Journal reported that this measure aims to enhance accessibility for foreign investors in the South Korean market. Reuters also noted that this change is part of efforts to include South Korea in the MSCI developed markets index. Recently, MSCI maintained South Koreas status as an emerging market in its annual market classification. Reuters highlighted that the conditions for utilizing the South Korean foreign exchange market have been cited as a limiting factor for inclusion in the developed markets index. The timing of the implementation is critical. The Wall Street Journal pointed out that the won has been depreciating against the dollar for several months. Since the beginning of this year, the won has fallen about 6% against the dollar, showing a weak performance compared to other major currencies. On the first day of the new trading system, the won-dollar exchange rate continued to decline, starting at 1,527.41 won and rising to 1,534.15 won. Factors contributing to the wons weakness include foreign capital outflows and increased demand for dollars. The Wall Street Journal cited foreign exchange strategists from OCBC, who analyzed that selling of won-denominated assets by foreigners, increased overseas investments by domestic investors, and a strong dollar are putting pressure on the won. There are also forecasts that the wons depreciation may continue. It was explained that the downward pressure on the won could ease only if foreign selling of domestic stocks decreases or if the dollar strengthens and U.S. Treasury yields decline. Bloomberg and Reuters have reported on the potential for exchange rate instability due to the expanded trading hours. The 24-hour system allows foreign investors to buy and sell won even after the South Korean market closes, helping to mitigate exchange rate risk. However, during late-night hours when trading volume is low, even small orders can cause significant price fluctuations. This change also places a burden on bank dealing rooms and foreign exchange authorities, who will need to monitor the market overnight. Foreign exchange authorities have stated their commitment to respond to rapid exchange rate fluctuations. The domestic government believes that the current value of the won is undervalued compared to the fundamental strength of the South Korean economy. They have also indicated readiness to respond if prices fluctuate sharply due to a lack of liquidity. Major international media outlets view the 24-hour system as a turning point for the opening of South Koreas foreign exchange market. However, they emphasize that for this system to serve as a practical stepping stone for inclusion in the MSCI developed markets index, sufficient trading volume and stable market operations during nighttime hours must be ensured.* This article has been translated by AI. July 6, 2026 13:52 -
Korean Won-Dollar Exchange Rate Fluctuates in 24-Hour Forex Market Launch As the foreign exchange market transitions to a 24-hour trading system, the won-dollar exchange rate is fluctuating around the 1,530 won mark. According to the Seoul foreign exchange market, as of 9:30 a.m. on July 6, the exchange rate for the Korean won against the U.S. dollar is trading at 1,532.7 won. The rate started at 1,527.60 won at 6 a.m. and has seen a slight upward trend since then. Despite some easing of external uncertainties, the exchange rate, which had remained stubbornly high, dropped nearly 30 won on July 3, raising hopes for a shift in market sentiment. With the dollars strength somewhat diminishing, there is an increasing likelihood that exporters, who had been concerned about the rate rising to 1,600 won, will begin selling dollars, which could exert downward pressure on the exchange rate. Starting today, the won-dollar foreign exchange market will operate 24 hours a day from 6 a.m. on Monday to 6 a.m. on Saturday, excluding weekends and January 1. Deputy Prime Minister Koo Yun-cheol emphasized during his visit to the Hana Bank dealing room that the launch of the 24-hour foreign exchange market reflects the fundamentals of the Korean economy, confirmed by strong external soundness, record-high current account surpluses, and inclusion in the World Government Bond Index (WGBI), as well as high demand from foreign investors. Min Kyung-won, an economist at Woori Bank, noted that while foreign selling in the domestic stock market and remittance burdens remain, the return of domestic companies demand for won conversion is likely to prevent a one-sided increase in the exchange rate. However, he added that low-price buying by importers and foreign remittance demand will support the lower end of the exchange rate.* This article has been translated by AI. July 6, 2026 09:44 -
24-Hour Forex Market Launches Amid Concerns Over Volatility The 24-hour foreign exchange market is set to begin operations. There are expectations that absorbing offshore non-deliverable forward (NDF) trading into the domestic market will reduce currency fluctuations, but concerns about increased volatility due to low liquidity during nighttime trading persist. According to the Seoul foreign exchange market on July 2, trading hours will transition to a 24-hour continuous system starting July 6. This change allows for won-dollar transactions every day except weekends and January 1. The opening of the foreign exchange market around the clock is anticipated to absorb offshore NDF trading. NDF transactions settle the difference between a predetermined exchange rate and the actual rate at maturity in designated currencies, such as dollars, without exchanging actual won overseas. The government has identified NDF trading as a significant factor contributing to currency fluctuations. When bets against the won are placed overseas overnight, the domestic market often opens with a lower actual value of the won. After the Seoul market closes, if the exchange rate rises in the New York NDF market, domestic investors tend to interpret this as a leading indicator for the next trading days exchange rate increase. Shin Hyun-sung, the governor of the Bank of Korea, has referred to this phenomenon as the tail wagging the dog. The extension of trading hours is expected to mitigate these negative factors. In July 2024, the Seoul foreign exchange market significantly extended its trading hours from 3:30 PM to 2 AM. This change has been credited with reducing gap risk by allowing real-time reflection of overseas events during the night. According to the Capital Market Research Institute, the average gap volatility before the extension was 0.306%, fluctuating between 0.2% and 0.5%. After the extension, it dropped to an average of 0.145%, moving within a range of 0.1% to 0.2%. However, some analysts have raised concerns about increased volatility due to low trading volumes during nighttime hours. Morgan Stanley Capital International (MSCI) noted in its annual market classification review last month that while trading hours have been extended to 2 AM, nighttime trading volumes are still insufficient, and bid-ask spreads are not as tight as in developed currency markets. According to Hanwha Investment & Securities, volatility in the foreign exchange market has increased by 30.4% during nighttime hours since the extension. Researcher Choi Kyu-ho stated, Since the foreign exchange market opened 24 hours, the average gap between quarterly high and low exchange rates (103.1 won) could widen by 20%, leading to a won-dollar exchange rate band of 120 won. This indicates ongoing liquidity issues with widening bid-ask spreads and thin order volumes. As the won-dollar exchange rate remains high in the 1550 won range, some analysts believe that the 24-hour opening will not change the direction of the exchange rate. The current rate is significantly influenced by foreign inflows. In the stock market, rising prices have led to profit-taking and rebalancing by foreign investors. As of the previous day, foreign investors had net sold 150.7476 trillion won in the securities market this year. Wi Jae-hyun, a researcher at Kyobo Securities, noted, The primary factor driving the rise in the exchange rate appears to be the rebalancing sales by overseas passive funds. Given the relative returns in the global stock market, it is likely that these rebalancing sales will continue for the time being. If rebalancing sales persist in the second half of the year, there may be no factors to prevent the upper limit, and we need to keep the upper limit for the third quarter open to 1600 won.* This article has been translated by AI. July 2, 2026 16:04 -
Korea's Forex Market Transition to 24-Hour Trading Faces MSCI Inclusion Challenges Starting July 6, the won-dollar forex market will transition to 24-hour trading, marking a significant step in the governments efforts to modernize the forex market. However, experts warn that simply extending trading hours will not guarantee inclusion in the Morgan Stanley Capital International (MSCI) developed market index, emphasizing the need for further reforms, such as the internationalization of the won, to enhance accessibility. According to the government, the shift to 24-hour trading is a key component of its forex market modernization strategy. This change will allow foreign investors to trade the won without time constraints, significantly improving market accessibility. The government hopes this will bring it closer to meeting the market openness standards required by MSCI. Inclusion in the MSCI developed market index is one of the main goals of the governments capital market modernization initiative. MSCI classifies global stock markets into developed markets (DM), emerging markets (EM), and frontier markets, with many global passive funds adjusting their investment allocations based on these classifications. However, market analysts believe that merely extending trading hours will not be sufficient to meet MSCIs criteria. MSCI evaluates various factors, including foreign investor access, the freedom of forex transactions, payment convenience, and regulatory predictability. In fact, MSCI did not include South Korea in its watchlist for potential inclusion in the developed market index as of June 23, citing the inability to conduct offshore physical delivery of the won and insufficient liquidity in the domestic forex market as limiting factors. This suggests that even with extended trading hours, if foreign investors cannot freely obtain and settle transactions in the won offshore, the perceived improvement in accessibility may be limited. The government is now pursuing the internationalization of the won as the next step in opening the forex market. The Ministry of Economy and Finance plans to announce a won internationalization roadmap this month, aimed at enhancing the infrastructure for won trading and settlement, and facilitating foreign investors access to the won offshore. The government also intends to expand the use of the won in current transactions and introduce an offshore won payment system starting in January next year. Experts agree that the key to MSCI inclusion lies more in the internationalization of the won than in the mere extension of trading hours. While increasing trading hours is a first step toward improving market accessibility, a conducive environment for foreign investors to trade and settle transactions in the won without inconvenience is essential to meet MSCIs market openness standards. Choi Kyu-ho, a researcher at Hanwha Investment & Securities, stated, The 24-hour opening of the forex market could increase volatility, but it is a necessary step, regardless of whether it happens sooner or later. Foreign institutional investors consider global rebalancing, internal regulations, and risk management comprehensively, so expecting a significant shift in investment direction solely from extended trading hours is unrealistic. As the internationalization of the won progresses, there are calls to strengthen market stability measures to accommodate increased capital movement. The government also plans to enhance external safety nets alongside market opening. Heo Jang, the Second Vice Minister of Economy and Finance, emphasized, The forex authorities have sufficient capacity to respond, and if the exchange rate deviates from fundamentals and excessive concentration occurs, we are prepared to implement necessary market stabilization measures immediately.* This article has been translated by AI. July 2, 2026 16:04 -
South Korea's Forex Authorities Sell $13.6 Billion Amid High Dollar Exchange Rate In the first quarter of this year, the won-dollar exchange rate remained high in the upper 1,450 won range, prompting South Koreas foreign exchange authorities to sell over $13.6 billion to stabilize the market. While this intervention was lower than the record high in the fourth quarter of last year, it still marked the fourth-largest dollar supply in history. According to the Foreign Exchange Authorities Net Transaction Report released by the Bank of Korea on June 30, the authorities sold a net total of $13.628 billion in the foreign exchange market during the first quarter. This figure represents a decrease from the fourth quarter of last year, which saw net sales of $22.467 billion. However, it significantly exceeded the net sales of $2.96 billion in the first quarter and $797 million in the second quarter of last year, as well as $1.745 billion in the third quarter. The foreign exchange authorities intervene by supplying dollars and purchasing won when the won-dollar exchange rate surges or when market volatility becomes excessive. Since the third quarter of 2019, the government has been disclosing the difference between total dollar purchases and sales by the foreign exchange authorities quarterly to enhance market transparency. In the fourth quarter of last year, despite a current account surplus, significant dollar outflows due to residents overseas securities investments led to the largest net sales by the foreign exchange authorities on record. The trend of high exchange rates continued into the first quarter of this year, resulting in continued large-scale net dollar sales by the authorities. The combined net sales of dollars in the fourth quarter of last year and the first quarter of this year reached $36.095 billion. Throughout the first quarter, the won-dollar exchange rate remained elevated. The average exchange rate for the won against the dollar in the Seoul foreign exchange market was recorded at 1,466.9 won. The monthly average rates were 1,456.51 won in January and 1,449.32 won in February, with a significant rise to 1,486.64 won in March amid the outbreak of conflict in the Middle East. Notably, in March, the average daily fluctuation of the exchange rate expanded to 11.4 won, indicating extreme volatility. However, the net purchases of U.S. stocks by residents decreased compared to the previous quarter. According to the Korea Securities Depository, domestic investors net purchases of U.S. stocks in the first quarter amounted to $10.644 billion, down approximately 22% from $13.587 billion in the previous quarter. These measures to defend the exchange rate have led to a decrease in foreign exchange reserves. South Koreas foreign exchange reserves fell from $428.05 billion at the end of last year to $423.66 billion at the end of the first quarter. In March, the authorities market intervention resulted in a sharp decline of $3.97 billion in reserves within a month, marking the largest decrease since April of last year, which saw a drop of $4.99 billion. However, foreign exchange reserves are influenced by various factors, including market interventions, fluctuations in the value of the dollar, and returns on foreign asset management. As the trend of high exchange rates continues into the second quarter, attention is focused on the scale of net transactions by the foreign exchange authorities. The average won-dollar exchange rate in the second quarter was 1,501.6 won, marking the first time in 28 years and three months that the quarterly average exchange rate reached the 1,500 won level since the first quarter of 1998 during the Asian financial crisis. Details of the foreign exchange market stabilization measures taken in the second quarter will be disclosed at the end of September. Experts attribute the persistent strong dollar phenomenon to the Federal Reserves hawkish stance and robust U.S. economy, along with structural dollar demand driven by increased private overseas asset investments as a major cause of the wons depreciation. Jeon Gyu-yeon, a researcher at Hana Securities, stated, Despite a current account surplus due to strong semiconductor exports, capital outflows through the financial account have increased, keeping the won-dollar exchange rate at a high level. The accumulation of private overseas assets is creating structural dollar demand, exerting downward pressure on the won.* This article has been translated by AI. June 30, 2026 17:00 -
US-Iran Agreement Raises Hopes for Hormuz Strait Reopening, Trade Normalization May Take Months Expectations are rising for the reopening of the Hormuz Strait following a temporary agreement between the United States and Iran. However, experts warn that it may take months for oil and gas trade to return to pre-war levels. Bloomberg reported on June 15, citing key market experts, that the agreement could alleviate concerns over supply disruptions and reduce upward pressure on oil prices. However, it noted that shipping companies, insurers, and refiners will need time to regain trust in the Hormuz route. Haris Kurshid, chief investment officer at Chicago-based Karobar Capital, stated, Just because the strait is reopening doesnt mean trade will normalize immediately. Logistics can resume quickly, but rebuilding trust will take time. Additionally, many importing countries and businesses have secured alternative routes and suppliers during the conflict. With some already having changed their procurement methods, returning to the previous trading structure may prove challenging even if the Hormuz Strait reopens. There are also hurdles to resuming operations. Charu Chanana, chief investment strategist at Saxo Markets, pointed out that mine clearance, shipping insurance costs, port congestion, and geopolitical surprises could slow down oil transportation. Priyanka Sachideva, an analyst at Singapore-based multi-asset broker Phillip Nova, assessed that the economic burden from rising energy prices and some infrastructure damage would not recover quickly. Predictions indicate that oil prices are unlikely to drop significantly in the short term. Tony Sycamore, a market analyst at online trading firm IG Australia, suggested that countries might seek to replenish reduced inventories and strategic reserves following the reopening of the strait. He noted that recent expectations of a price drop have already been largely factored into the market. Lin Tran, a market analyst at online broker XS.com, added that if oil demand remains strong while supply recovery is slower than expected, prices could find support again. The stability of the agreements implementation is also a concern. Chris Weston, head of research at Australian online forex and CFD broker Pepperstone Group, remarked that the US-Iran agreement remains unstable, with issues such as Irans demands for reconstruction support and frozen assets likely to become contentious. Sarah Bakshuri, CEO of energy consulting firm SVB Energy International, noted that importing countries and businesses will increasingly explore alternative logistics and supply sources, indicating a potential for long-term changes. The recovery of trade is expected to occur gradually. Xavier Tang, chief market analyst at energy and shipping data analytics firm Vortexa, explained that once the agreement is finalized and insurers guarantee vessel operations, the movement of empty tankers will increase first, followed by a gradual resumption of oil production and refinery operations. Selena Ling, chief economist at Singapores OCBC Bank, also stated that it will take time for production facilities affected by bombings or shutdowns to return to full operation. June 15, 2026 15:54