The Korean won strengthened to the 1,450s against the U.S. dollar on Friday, buoyed by foreign investors' aggressive buying of domestic stocks.
The won closed at 1,455.1 per dollar in daytime trading (as of 3:30 p.m.) in the Seoul foreign exchange market, down 7.7 won from the previous session. The previous trading day on Tuesday had ended at 1,462.8 won, the lowest level since February 27 (1,439.7 won), just before the outbreak of the Middle East conflict, and the currency extended its decline further.
The won opened at 1,465.8, up 3 won, before reversing into a downward trend. Losses widened in the afternoon, with the currency dropping to as low as 1,451.5 just before the market close.
Foreign investors' purchases of Korean stocks are cited as the main driver of the won's appreciation. The benchmark KOSPI closed at 7,384.56, up 447.57 points or 6.45% from the previous session, hitting a record high. Foreign investors net purchased 3.13 trillion won ($2.3 billion) worth of shares, leading both the index rally and the won's strengthening.
International oil prices also declined after U.S. President Donald Trump said overnight that significant progress had been made in negotiations with Iran and that the ceasefire would be maintained.
"On the surface, foreign investors' net stock buying, expectations of progress in U.S.-Iran negotiations, and the easing of oil price gains influenced the won's appreciation," said Lee Min-hyuk, an economist at KB Kookmin Bank. "In addition, dollar-selling by exporters and capital inflows linked to the World Government Bond Index (WGBI) supported the won's strength."
