Won Makes Sharp Turnaround as Exporter Sales Boost Currency

The Korean won has staged a remarkable recovery this month, surging by 6.24% against the US dollar and becoming one of the top-performing major currencies. The won's strength is largely due to exporter dollar sales, particularly from SK hynix, which is repatriating $26.5 billion raised through its Nasdaq listing earlier this month.

The Bank of Korea's policy rate increase by 25 basis points to 2.75% on July 16 has also provided additional support for the won. Markets expect one or two more hikes by year-end, which will help to curb inflation and stabilize the currency.

Foreign investors have reduced their net selling of Korean stocks since early July, easing dollar demand that had contributed to the currency's decline. The won's rally has also weakened its traditionally close correlation with the Japanese yen, pushing the won-yen cross rate into the 900 won range per 100 yen.