The South Korean won strengthened against the U.S. dollar on October 16, with the exchange rate dropping to 1,341.5 won at 9 a.m. This marked a decrease of 3.1 won, or 0.23%, from the previous day's close. Analysts suggest the rate could fall below 1,340 won as U.S. government bond yields decline, weakening the dollar.
Min Kyung-won of Woori Bank noted that despite conditions favoring a stronger dollar, the market showed reduced aggressive demand. He attributed this to dollar selling by major South Korean exporting corporations, which typically strengthens the won. Additionally, the yen's strengthening in Asia is expected to support the won, as the two currencies often move in tandem.
However, the won's strength faces headwinds from foreign investors selling domestic stocks. Min pointed to concerns about AI investment profitability and funding burdens, particularly in the semiconductor sector, which has led to weak stock prices. This net selling by foreign investors could continue, putting upward pressure on the exchange rate.