Korean Won Falls on Dollar Strength

The South Korean won traded around 1,329 per dollar, extending gains toward its strongest level since October 2024, as robust exports and dollar supply from exporters continued to support the currency. Exports surged 83.5% year-on-year to a record $120.94 billion in September, led by a 263% jump in semiconductor shipments, while the average daily trade surplus approached $2.5 billion. US Treasury yields also fell to near four-week lows, limiting support for the dollar and allowing the won to strengthen. Meanwhile, foreign investors net sold KRW 11.21 trillion worth of KOSPI stocks last week amid AI investment concerns and growing Chinese competition in memory chips, raising the risk of further capital outflows. Additionally, Middle East tensions and attacks on commercial vessels in the Strait of Hormuz heightened oil-supply disruption risks, threatening to raise South Korea’s energy import bill and increase dollar demand.

The South Korean won traded around 1,332 per dollar, recovering losses and approaching its strongest level since October 2024, as an easing semiconductor sell-off and renewed appetite for riskier assets lifted the currency. Foreign investors returned to net buying in South Korean equities, purchasing KRW 343.5 billion worth of shares after a prolonged tech-led rout, helping ease concerns over capital outflows. Additionally, Federal Reserve Chair Kevin Warsh's positive assessment of the US economy and AI-driven growth helped revive demand for riskier assets, while declines in US Treasury yields and the dollar offered further support to the won. However, Warsh gave no clear signal on a rate hike this month, while strong US data and inflation concerns reinforced bets on a December hike. Also, persistent AI valuation concerns, Chinese competition in memory chips, and elevated inflation risks remained potential headwinds for Korean markets.

The South Korean won traded around 1,343 per dollar, extending losses as foreign capital outflows and concerns over AI investments weighed on local markets. Foreign investors withdrew a net $19.97 billion from South Korean stocks and bonds in September, marking an eighth consecutive month of net outflows. The selling persisted into October, with foreign investors offloading KRW 3.6 trillion in local shares on Thursday amid heavy losses in Samsung Electronics and SK hynix, driven by concerns over AI valuations and Chinese competition in memory chips. Additionally, US producer prices rose 1.3% month-on-month in September, the largest increase since March 2022, while annual inflation accelerated to 6.3%, fueling concerns over persistent price pressures and potential Federal Reserve tightening. Meanwhile, a retreat in US Treasury yields and the dollar offered some external relief.