Won Gains on Rate Hike Expectations, Exporter Dollar Selling

The Korean won gained against the US dollar due to expectations of a rate hike by the Bank of Japan and exporter dollar selling. As of 9am on the 14th, the won-dollar exchange rate was 1,343.1 won, down 2.8 won (0.2%) from the prior trading day's weekly closing price.

Some analysts predict that the won could strengthen further to the 1,330-won level intraday if Japan raises its policy rate by one notch to 1.25% as expected. Min Kyung-won of Woori Bank said 'In the global FX market, pricing is reflecting Japan's hike more proactively than the U.S. Federal Reserve (Fed), adding that Asian currency including the won tends to move in the same direction as the yen.'

However, some expect the decline will be limited even if the rate falls, as corporations that import raw materials and other goods from overseas may step up bids to buy dollars at lower prices.