SEOUL: The South Korean won appreciated at its fastest monthly pace since 2009, driven largely by a surge in U.S. dollar inflows into the country’s foreign exchange market following SK hynix Inc.’s American depositary receipt (ADR) offering on the Nasdaq, industry data showed Sunday, Yonhap News Agency reported.
The won was quoted at 1,424 per U.S. dollar at 3:30 p.m. Friday, up 125.4 won from the end of June, according to foreign exchange data.
The monthly gain was the largest since March 2009, when the won strengthened by 150.5 won against the U.S. dollar in the aftermath of the global financial crisis.
The currency has rebounded steadily after falling to a more than 17-year low of 1,599.2 won per dollar in intraday trading on July 1.
On a weekly basis, the won gained 42.6 won against the dollar in the final week of July, marking its strongest weekly performance since the second week of November 2022.
Among major currencies, the won posted the strongest gain against the U.S. dollar last month.
According to separate data compiled by Yonhap Infomax, the won appreciated 7.95 percent against the dollar in July from a month earlier, followed by the Japanese yen, which gained 3.15 percent, the Swedish krona at 1.91 percent and the British pound at 1.63 percent.
Market experts attributed the won’s strength to heavy dollar inflows after SK hynix converted proceeds from its ADR offering into the local currency.
SK hynix Inc. raised about 40 trillion won (US$26.5 billion) through its ADR offering on the Nasdaq earlier last month and is expected to use most of the funds for domestic investments, including the Yongin semiconductor cluster.
Economists expect the won to remain on an upward trajectory, citing stronger-than-expected economic growth and expectations that the Bank of Korea (BOK) will continue raising interest rates, narrowing the rate differential with the United States.
“The won has entered an upward cycle,” Lim Hwan-yeol, an economist at Woori Bank, said. “The won-dollar exchange rate is expected to fall to around 1,380 won, though the outlook could change depending on future dollar inflows and monetary policy decisions in South Korea and the U.S.” – BERNAMA-YONHAP
