South Korean Won Nears More Than 9-Month High

The South Korean won rose toward 1,422 per dollar, approaching its strongest level in more than nine months, as stronger external buffers and steady foreign inflows supported the currency. South Korea's foreign reserves rose for a second consecutive month to $427.95 billion in July, driven by foreign exchange stabilization bond issuance and higher foreign currency deposits, reinforcing confidence in the country's ability to manage external risks. Separately, US Treasury Secretary Scott Bessent pointed to recent volatility in the won, highlighting the importance of regional currency stability after the US-Japan intervention to support the yen and signaling continued attention toward excessive FX volatility. The currency also continued to benefit from foreign inflows linked to SK Hynix's ADR offering, with proceeds converted into won for domestic semiconductor investment.

The South Korean won strengthened to around 1,425 per dollar, extending its July recovery, supported by strong foreign inflows and improving trade fundamentals. The currency continued to benefit from dollar inflows linked to SK Hynix's ADR offering, as proceeds from the transaction were converted into won for domestic semiconductor investment. Additionally, South Korea's external outlook improved, with July exports rising 62.9% year-on-year to $98.89 billion as semiconductor shipments surged 179%, lifting the trade surplus to $30.32 billion. This reinforced expectations for a recovery in growth amid robust chip demand. Meanwhile, renewed uncertainty over US-Iran negotiations kept geopolitical risks elevated and weighed on risk sentiment. Separately, softer-than-expected inflation eased concerns over domestic price pressures, though elevated core inflation limited expectations for a shift in the BOK's policy stance.

The South Korean won traded around 1,440 per dollar in late July and has gained more than 8% against the US dollar this month, marking its strongest monthly performance since March 2009. The appreciation followed reports of dollar-selling intervention by South Korean foreign exchange authorities. Officials also said Seoul and Tokyo were maintaining close coordination amid recent currency moves, noting that continued dollar supply in the domestic market could provide further support for the won. Global risk sentiment improved following a rebound in technology stocks, reducing demand for the greenback. Stronger foreign investor activity in South Korean equities boosted currency flows, while expectations of continued AI-led semiconductor export growth reinforced Korea's external position.