The won's five-session streak of yearly highs against the dollar came to an end on the 23rd. The currency strengthened to its firmest level in two years as exporters sold dollars, but the move reversed later in the session as dollar buying emerged. Bank of Korea Governor Shin Hyun-song left the door open to further appreciation, yet the won weakened for the first time in six sessions.
The won closed the onshore session at 1,324.6 per dollar in Seoul on the 23rd, up 0.4 won from the previous session. It opened at 1,324.5 and reached 1,321.5, its strongest level in two years, before giving up the gain in the afternoon and turning weaker.
Exporter dollar sales drove the won's early advance. Expectations for a dollar supply surplus grew after the Bank of Korea signaled that this year's current account surplus would exceed its earlier forecast of $450 billion, and after Shin referred to the possibility of further won appreciation.
Asked at a parliamentary audit by the National Assembly's finance and economic planning committee whether the won could strengthen further, Shin said: "I think there is ample room for that." A stronger won, he suggested, is better suited to a recovery in domestic demand and a rebalancing of the economy.
Shin stressed, however, that predictability matters more than the level of the exchange rate itself. "Even if the exchange rate moves, it is most appropriate for it to move gradually and at a predictable pace," he said.
Overnight weakness in U.S. technology shares limited the won's gains. The Nasdaq composite fell 2.60% and the Philadelphia Semiconductor Index dropped 6.72%, stoking concerns about returns on artificial intelligence investment and sharpening risk aversion.
Even so, the won's retreat was contained by continued dollar selling from exporters. Dollar buying also came in as the rate approached the 1,320 level, market participants said. Some pointed to possible dollar purchases by pension funds and other institutions, though the identity and size of the buying could not be confirmed.
Next week's U.S. Federal Open Market Committee meeting is another variable. Market participants see a hawkish hold as a potential source of dollar strength. On the other side, robust semiconductor exports and the current account surplus continue to supply dollars, keeping upward pressure on the won.
