The won closed at its strongest level against the dollar in more than two years, pushed higher by steady dollar selling from exporters. The KOSPI fell sharply and foreign investors continued to sell Korean shares, but dollar sales tied to robust semiconductor exports drove the won-dollar rate lower.
The won-dollar rate ended daytime trading in the Seoul foreign exchange market at 1,328.1 won on the 20th, down 2.2 won from the previous session. On a closing basis, that is the lowest level since Oct. 2, 2024, when the rate stood at 1,319.3 won.
The rate opened at 1,330.3 won and fell to as low as 1,325.4 won during the session, marking a new intraday low for the third consecutive trading day. Analysts attribute the decline to a steady inflow of dollar sales from exporters, led by semiconductor companies.
The rate held its downward course even as the KOSPI tumbled and foreign investors kept selling shares. Demand for dollars from foreign investors converting proceeds of share sales can push the rate up, but dollar selling by exporters appears to have offset that pressure.
The dollar also weakened slightly. The dollar index, which measures the greenback against six major currencies, stood at 101.78 at 3:23 p.m., down from 101.98 the previous day.
Separately, the Korea Capital Market Institute said the yield on South Korea's 10-year treasury bond rose to 4.41% from 2.95% between the end of September last year and the end of September this year, an increase of 1.46 percentage points. Over the same period, yields rose 1.14 percentage points in the U.S. and 1.31 percentage points in France.
The institute found that the yield increase in South Korea owed more to domestic bond supply and demand than to overseas factors. Based on an analysis of changes in term premiums in major economies, only 0.13 percentage point of the 1.17 percentage point rise in the term premium on 10-year Korean treasury bonds could be explained by external factors. The institute said the demand base for long-term government bonds weakened as insurers slowed their purchases of long-dated sovereign debt and buying by foreign investors, pension funds and mutual aid associations also lost momentum.
