The won-dollar exchange rate rebounded on the 9th, climbing back into the 1,500-won range amid heightened military tension between the United States and Iran. However, gains were limited by expectations for SK hynix's American Depositary Receipt (ADR) listing and caution over possible intervention by foreign exchange authorities.
In the Seoul foreign exchange market, the won-dollar rate closed daytime trading at 1,506.1 won as of 3:30 p.m., up 7.6 won from the previous trading day. After opening at 1,507.5 won at 6 a.m., up 9 won from the previous day, it fell to as low as 1,496.8 won during the session before reversing course to rise to 1,509.0 won. On the previous day, the rate had fallen by nearly 30 won on expectations for the SK hynix ADR listing, dropping to as low as 1,498.1 won intraday.
The rebound came as bargain-hunting demand flowed in following the recent sharp decline, combined with the renewed escalation of U.S.-Iran geopolitical tension overnight and a surge in international oil prices. Risk-averse sentiment translated into a weaker won.
Several supply factors capped the upside. Expectations for SK hynix's Nasdaq ADR listing, scheduled for the 10th, and caution over intervention kept the rate below 1,510 won. Foreign investors bought domestic stocks for a second straight day. On the day, foreign investors net-purchased about 190 billion won worth of shares on the stock market, limiting the rate's gains.
Coordination between the Korean and Japanese foreign exchange authorities was also cited as a factor pressing down the upside. Atsushi Mimura, Japan's Vice Minister of Finance for International Affairs, said he was in close consultation with Korean foreign exchange authorities on foreign exchange market trends. Korean authorities were also said to share the view that coordination with Japan helps stabilize the exchange rate.
Still, some caution remains, with observers saying it is too early to lower their guard. One dealer at a commercial bank noted, "The more supply and demand drive the market, the more directional forecasts lose their meaning." He said that even if the rate were to fall sharply, corporate demand to convert dollars for investment purposes would flow in and support the floor. He explained that the floor level is still difficult to gauge and it is unclear when the direction will turn, making it a challenging market in which even keeping up with real-time movements is difficult.
