South Korean Won Hits 17-year Low

The South Korean won rose to around 1,413 per dollar, approaching a more than ten-month high, as soft US inflation data eased expectations for further Federal Reserve tightening and boosted risk appetite. US producer prices were unchanged month-on-month in July, easing concerns over renewed inflation pressures. Markets now price in around a 35% chance of a rate hike in September, down from 55% a week earlier, limiting upward pressure on the dollar. Additionally, persistent dollar-selling flows and renewed foreign demand for Korean assets helped lift the won. The conversion of SK hynix’s ADR proceeds into won remained one of the key factors behind its sharp appreciation in recent weeks. Foreign investors’ return to Korean equities has also increased demand for the local currency, while Korea’s strengthening economic recovery, underpinned by strong exports and improving consumption, provides an additional positive backdrop for the won.

The South Korean won traded around 1,415 per dollar, remaining near a more than ten-month high, supported by persistent dollar-selling flows. The currency continued to benefit from the conversion of SK hynix's ADR proceeds into won, which has been a key factor behind its sharp appreciation in recent weeks. Expectations for further Bank of Korea rate hikes are also strengthening the currency's fundamental outlook, after BOK Deputy Governor Ryoo Sang-dai said stronger growth and persistent core inflation could warrant further tightening. Separately, reduced expectations for a September Federal Reserve rate hike are easing pressure from the dollar, with markets lowering the probability of a September hike to around 40% from 50%. Meanwhile, uncertainty over the reopening of the Strait of Hormuz remains a risk to the currency, with elevated oil prices raising concerns over Korea's energy import costs and inflation.

The South Korean won traded around 1,417 per dollar, pulling back from a recent over ten-month high, as renewed uncertainty over the Strait of Hormuz weighed on the currency. Iran denied holding direct talks with Washington over reopening the waterway, casting doubt on a near-term deal and keeping oil prices elevated, raising concerns over import costs and inflation in South Korea. Meanwhile, strong semiconductor exports and continued dollar selling by exporters provided support, with July exports rising nearly 63% year-on-year to $98.89 billion and semiconductor shipments surging 179%. Expectations of foreign exchange intervention by South Korean authorities are also helping limit renewed won weakness and keep the currency near its strongest level since October 2025. At the same time, investors are monitoring this week's US inflation data for further clues on the Federal Reserve's policy outlook and the dollar's direction.