The Korean won strengthened against the U.S. dollar on the 14th as the greenback weakened and exporters sold dollars, reversing a 10-won jump from the previous session that followed a sharp KOSPI decline and heavy foreign stock selling. The gains were capped, however, as foreign investors continued to unload Korean shares and concerns persisted over rising oil prices stemming from the Middle East.
The won closed daytime trading at 1,338.3 per dollar in the Seoul foreign exchange market, down 6.8 won from the previous session. The currency opened at 1,344.0 before extending gains to 1,336.0 in the afternoon.
Easing concerns about further tightening by the U.S. Federal Reserve reduced upward pressure on the dollar, driving the won's advance. John Williams, president of the Federal Reserve Bank of New York, said one more rate increase this year could be appropriate but that he does not expect additional hikes will be needed next year. The dovish remarks pushed the dollar index lower, supporting the won.
Steady dollar selling by exporters, buoyed by strong semiconductor shipments, also supported the currency.
Foreign selling of Korean stocks limited the won's gains. Geopolitical tensions in the Middle East, higher global oil prices and caution ahead of the U.S. consumer price index for September, due late in the day, also restrained aggressive dollar selling.
Separately, Bank of Korea Governor Shin Hyun-song said the artificial intelligence investment boom is driving South Korea's growth while also adding to inflationary pressure. Speaking at a CNN "Global Perspectives" panel discussion held in Bangkok, Thailand, alongside the annual meetings of the International Monetary Fund and the World Bank, Shin said, "The AI investment boom is overwhelming the negative growth impact of the war in the Middle East, but both factors are pushing prices higher," stressing the importance of price stability through monetary policy. He also said the central bank would firmly maintain its 2% consumer inflation target.
