The exchange rate between the South Korean won and the U.S. dollar, along with international oil prices, showed signs of stabilization following news of a ceasefire agreement in the Middle East. Foreign capital, which had previously driven the won's depreciation, is returning to the domestic stock market, alleviating concerns over oil supply disruptions and restoring stability in global financial and commodity markets.
On June 15, the exchange rate of the won against the dollar closed at 1,511.1 won, down 8.7 won from the previous trading session.
The announcement of the ceasefire agreement between the U.S. and Iran boosted investor sentiment towards riskier assets. The won, considered a risk asset, had been under pressure since the outbreak of the Middle East war, particularly as foreign investors recorded unprecedented net selling in the domestic stock market, further weakening the currency.
In March, shortly after the outbreak of the war, the average daily fluctuation of the won's exchange rate reached 0.76%. This eased to 0.59% in April and 0.45% in May, but rose again this month, threatening to surpass the 1,600 won mark. Despite strong verbal interventions from foreign exchange authorities, the rate remained stubbornly high.
However, with the geopolitical risks easing, the previously rising exchange rate has begun to stabilize. Foreign investors, who had been net sellers, shifted to net buying on June 12 and continued this trend today. The influx of foreign capital into the domestic stock market has increased demand for the won, contributing to downward pressure on the exchange rate.
Market analysts believe that if foreign buying continues alongside the ceasefire in the Middle East, the downward pressure on the won may further ease. Nonetheless, uncertainties surrounding U.S. monetary policy remain a factor that could affect the exchange rate.
Expectations for reduced tensions in the Middle East were also reflected in international oil prices. As of 3 p.m. today, Brent crude was trading around $83 per barrel, while West Texas Intermediate (WTI) fell to around $80 per barrel.
Although these prices are still high compared to the $60 range before the war, they represent a significant decrease from the over $110 per barrel seen immediately after the conflict began. The potential reopening of the Strait of Hormuz, a key route for global oil transport, has alleviated concerns about supply disruptions.
However, it is expected to take some time for domestic consumers to feel the impact of stabilized international oil prices. Typically, there is a lag of 2 to 3 weeks before changes in international oil prices are reflected in domestic retail prices. In fact, during the second week of June, the average price of gasoline at nationwide gas stations was 2,009.9 won per liter, down 0.5 won from the previous week, while diesel prices fell by 0.3 won to 2,004.8 won, indicating a stable trend.
Lee Young-won, a researcher at Heungkuk Securities, stated, "Even after the ceasefire agreement, demand for restoring production facilities and replenishing depleted inventories may continue. The U.S. Energy Information Administration (EIA) also projects that WTI and Brent crude prices will be around $81 and $86, respectively, by the end of the year." He added, "Post-war recovery demand and movements to enhance energy security could also influence future oil price trends."
* This article has been translated by AI.
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