Geopolitical tensions in the Middle East are rising, putting upward pressure on the won-dollar exchange rate.
As of 9:10 a.m. in the Seoul foreign exchange market on August 18, the exchange rate for the Korean won against the U.S. dollar is trading at 1,415.5 won.
The 60-day negotiation period established under a memorandum of understanding signed by the U.S. and Iran in June ended on August 17 without significant progress. The U.S. has announced plans to impose strong economic sanctions on Iran this week, further heightening geopolitical concerns in the region.
U.S. stock markets fell across the board overnight. On August 17, the Dow Jones Industrial Average closed down 272.63 points (0.51%) at 53,459.78. The S&P 500 index dropped 40.70 points (0.52%) to finish at 7,745.06, while the tech-heavy Nasdaq Composite Index fell 84.25 points (0.32%) to close at 26,644.91.
Adding to the uncertainty in the Middle East is news of Israeli airstrikes in Lebanon. The demand for dollars from importers, who are waiting around the 1,410 won level for payments, is also seen as a factor supporting the lower end of the exchange rate.
Min Kyung-won, an economist at Woori Bank, stated, "Offshore custody selling and concerns over intervention by Japanese authorities are limiting the upper range of the exchange rate. Given that the Philadelphia Semiconductor Index and Korean stock ETFs rose overnight, and foreign investors have been net buyers on the KOSPI for four consecutive trading days, it is likely that foreign buying will positively influence the KOSPI today."
* This article has been translated by AI.
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