The Korean won strengthened against the dollar for a fourth straight session to its strongest level of the year, lifted by robust semiconductor exports. Falling oil prices on hopes for U.S.-Iran talks revived appetite for risk assets, while dollar selling by exporters added to the pressure.
The won closed at 1,325.2 per dollar in the Seoul foreign exchange market on the 21st, down 2.9 won from the previous session.
The currency opened at 1,325.5 and firmed to 1,322.8 around 9:01 a.m., its strongest level since Oct. 2, 2024, marking a fourth consecutive session at a yearly high.
Driving the move was the prospect of a wider dollar supply from booming exports. Exports totaled $61.6 billion in the first 20 days of October, up 105.4% from a year earlier, according to the Korea Customs Service. That was the largest amount ever for the Oct. 1-20 period. Semiconductor exports jumped 222.5%, leading the overall gain.
Exporters converting dollar proceeds and unwinding existing currency hedges also weighed on the exchange rate. Renewed risk appetite on expectations for U.S.-Iran negotiations further supported the won. The won pared some of its gains, however, a day before the Bank of Korea's monetary policy board decides on the base rate.
Market participants see the board's decision on the 22nd as the key variable for the currency's next direction. While most expect the base rate to be held steady, attention is on whether any board member dissents in favor of a hike and on signals about the path of monetary policy.
"The market has already priced in much of the chance of a rate increase in November, so disappointment in the bond market could grow if no related signal comes out of this meeting," a bond market expert said. "If the plan is to continue raising rates, the board needs to lay out the future policy path to some degree along with this hold decision."
After the board meeting, attention is expected to shift to the U.S. Federal Open Market Committee meeting on the 27th and 28th.
