Korean Won Extends Gains on Chipmaker Dollar Sales

The South Korean won strengthened to around 1,330 per dollar, extending gains to its strongest level since late October, as steady dollar selling by the country’s semiconductor exporters helped cap upward pressure on the exchange rate. Chipmakers have remained consistent in converting their foreign-currency earnings, providing a key source of support for the won. However, further gains were limited by rising global oil prices and US Treasury yields, which bolstered the dollar amid fading hopes for US-Iran negotiations and increased expectations of a December Federal Reserve rate hike. Meanwhile, Bank of Korea data showed that import prices fell 1.8% month-on-month in October, reversing a 1.9% increase in September, largely reflecting a 1.6% appreciation in the won against the dollar and a 2.6% decline in Dubai crude prices.

The South Korean won strengthened to around 1,330 per dollar, reaching its highest level since late October, as robust export growth and easing foreign selling pressure supported the currency. Strong domestic data lifted sentiment, with exports more than doubling year-on-year in the first 10 days of November, driven by a 331.2% surge in semiconductor shipments, while employment rose by 139,000 in October, marking the fourth consecutive month of job growth. Foreign investors also returned as net buyers of Korean equities in the previous session, providing additional support. Hopes for a US-Iran diplomatic resolution improved risk appetite, while expectations of fewer US military strikes eased concerns over prolonged Middle Eastern oil supply disruptions. However, gains faced headwinds from a stronger dollar as hotter-than-expected US inflation and hawkish Federal Reserve comments reinforced expectations of further rate hikes.

The South Korean won weakened to around 1,344 per dollar on Tuesday, retreating from the previous session's gains as foreign equity outflows continued to weigh on the currency. Foreign investors sold a net KRW 693 billion ($514 million) worth of local shares on Monday, marking their seventh consecutive session of net selling and limiting demand for the won. Moreover, dollar conversions by domestic semiconductor exporters added to downward pressure on the exchange rate, with companies reportedly stepping up sales after the rate climbed into the 1,360-won range in the previous session. Meanwhile, improving global risk appetite, following an overnight rally on Wall Street and a sharp decline in oil prices, helped limit the won's losses. Hopes for renewed US-Iran cease-fire negotiations also eased geopolitical concerns.