Korean Won Stabilizes in the 1380s Against the Dollar Amid Dollar Weakness

The won-dollar exchange rate has fallen into the 1380s, supported by a weaker dollar and increased dollar selling from exporters.

As of 9:05 a.m. in the Seoul foreign exchange market, the exchange rate is trading at 1388.0 won against the U.S. dollar.

The rate opened at 1389.1 won, down 8.6 won from the previous trading day as of 6 a.m.

The previous day, the exchange rate dropped below the 1300 won mark during trading for the first time in about 10 and a half months, and it has continued to decline. This marks the first time the rate has fallen into the 1380s since September 19 of last year, when it hit an intraday low of 1388.4 won.

Analysts interpret this decline as a result of significant inflows of dollar selling from exporters seeking to procure won, combined with the weaker dollar. With the ongoing decline in the exchange rate since last month, expectations for high rates have diminished, and the market positioning has shifted from long to short as it fell below the psychological support level of 1400 won.

Min Kyung-won, an economist at Woori Bank, stated, "The decline in the exchange rate is likely to lead to a self-reinforcing flow of additional dollar selling," adding that "the possibility of offshore short plays chasing the weaker dollar overnight is expected to support this trend."

He further noted, "Foreign net selling in the domestic stock market and the influx of bargain-hunting are factors that limit the lower end of the exchange rate," and emphasized that "given the rapid decline in the exchange rate, recurring funds such as payment and currency exchange demand may perceive this range as an attractive buying opportunity and are likely to flow in."