Geopolitical tensions surrounding the Hormuz Strait are exerting upward pressure on the won-dollar exchange rate.
As of 9:20 a.m. on August 7, the exchange rate in the Seoul foreign exchange market is trading at 1,422.9 won against the U.S. dollar.
Recently, expectations for negotiations between the U.S. and Iran have revived risk appetite among investors. However, renewed tensions in the Hormuz Strait have dampened overall investment sentiment.
Concerns are growing that Iran's push to prohibit U.S. and Israeli vessels from passing through the Hormuz Strait could complicate diplomatic efforts between the two sides. This has led to a rebound in international oil prices, which is also putting upward pressure on U.S. Treasury yields and the dollar.
U.S. stock markets fell overnight due to uncertainties surrounding the Hormuz Strait and concerns about a potential interest rate hike by the Federal Reserve in September, which contributed to rising oil and market rates. Investors are also adopting a wait-and-see approach ahead of the July non-farm payroll report. The Dow Jones Industrial Average dropped by 0.9%, the S&P 500 fell by 0.2%, and the Nasdaq decreased by 0.1%.
Min Kyung-won, an economist at Woori Bank, stated, "The likelihood of increased selling pressure from foreign investors seeking to minimize uncertainty in the domestic stock market is high, which will weigh on the risk-sensitive won. Additionally, the active dollar purchases by importers ahead of mid-month settlements are also contributing to the rise in the exchange rate."
* This article has been translated by AI.
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