The Korean won's exchange rate against the yen fell below 900 for the first time in one year and eight months on the 23rd. The won strengthened on robust domestic economic growth, while the yen struggled to escape weakness amid a strong-dollar trend and a fiscal expansion stance, analysts said.
The won-yen cross rate stood at 899.46 won per 100 yen as of 3:30 p.m., down 7.96 won from the previous trading day's 907.42 won. In the morning, it dropped to 899.79 won, falling below 900 intraday for the first time since November 21, 2024 (895.735 won), and later slid as low as 898.51 won.
The won strengthened as South Korea's second-quarter economic growth exceeded market expectations. The yen, meanwhile, continued to weaken against the dollar, contributing to the decline in the won-yen rate, or won strength.
Indeed, the yen against the dollar surged past 163 yen on the 21st, reaching its highest level since December 1986, and traded around 163 yen again on the 23rd. A rise in the yen-dollar rate means a decline in the yen's value.
The yen has continued its weak trend, as it remains far lower than in advanced economies such as the United States (an annual 3.50–3.75%) despite the Bank of Japan's (BOJ) benchmark rate hike (to 1%) last month.
In addition, some assessments point to Japan's "Basic Policy on Economic and Fiscal Management and Reform," announced by the Japanese government on the 21st, which laid out an aggressive fiscal stance and further fueled yen weakness. In response, Japanese Finance Minister Katayama Satsuki said, "If necessary, we will take appropriate and decisive action at any time," but the market's reaction was limited.
The won's strength also drove a sharp decline in the won-dollar rate. The won-dollar rate's daytime closing price fell 13.3 won to 1,466.8 won on the 23rd. That is the lowest level in over two months since May 7 (1,454 won). The rate, which had risen 6.7 won to 1,480.1 won the previous day, dropped more than 10 won in a single day.
Analysts said the decline was driven by factors including SK hynix sequentially converting into won the $26.5 billion (about 40 trillion won) raised through its U.S. American Depositary Receipt (ADR) listing, as well as sell orders of dollars by exporters. Foreign investors' net buying in the domestic securities market for four consecutive trading days was also cited as a factor.
