The won-dollar exchange rate climbed back above the 1,500 level, driven by broad-based dollar strength stemming from geopolitical risk in the Middle East. The dollar supply expected from SK hynix's listing of American Depositary Receipts (ADRs) in the United States has yet to materialize in earnest, leaving few factors to push the exchange rate lower.
In the Seoul foreign exchange market on the 13th, the won-dollar rate closed daytime trading at 1,503.4 won, up 2 won from the previous session. The rate opened higher from early in the session and at one point rose to the 1,504 range, maintaining a firm trend centered around the 1,500 line.
External factors drove the rise. As tensions between the United States and Iran persisted, safe-haven demand strengthened and the global dollar firmed. In Asian trading, the dollar index (DXY), which measures the dollar's value against six major currencies, rose to the 101 level. Domestic stock markets also fell sharply, reflecting risk-averse sentiment in the exchange rate.
The market had expected dollar-selling flows from SK hynix's ADR listing to come in from last week, but no notable supply has yet emerged. With SK hynix (000660.KS) plunging on the day, expectations for related dollar supply appeared to weaken somewhat.
Exports, by contrast, continued to perform strongly. According to the Korea Customs Service, exports during the first 10 days of this month reached 29.8 billion dollars, up 53.9 percent from the same period last year and a record high for the comparable period. The improvement in exports, led by semiconductors, is a favorable factor for the won, but was overshadowed on the day by global dollar strength.
"There isn't much volume being felt in the market related to SK hynix," an official at a commercial bank said.
The market expects caution to persist ahead of this week's Bank of Korea Monetary Policy Board meeting, regarding both the base rate decision and the future direction of monetary policy. For the time being, however, the situation in the Middle East, global dollar movements, and whether dollar supply materializes in connection with the SK hynix ADRs are seen as the key variables for the won-dollar exchange rate.
