Won Strengthens as Rate Pause Bets Rise, Exporters Flee US Dollar

The South Korean won (KRW) strengthened against the US dollar (USD) on August 24, fueled by expectations that the Federal Reserve (Fed) will not raise interest rates at its upcoming meeting. The won-dollar exchange rate dropped from the 1,400-won level to around 1,300 won over the past few days and has maintained this level for three consecutive trading days.

The decline in the won-dollar exchange rate is partly due to domestic exporters selling dollars. According to a report by lawmaker Kim Nam-joon's office on the National Assembly Strategy and Finance Committee, nonfinancial private companies sold $263.59 billion worth of dollars in the second quarter of this year, a 71.5% increase from the same period last year.

Park Sang-hyun, a researcher at iM Securities, noted that Chair Kevin Warsh's speech at Jackson Hole could impact the dollar's trajectory. The Fed's rate policy will be closely watched in the coming weeks as investors await clarity on the US central bank's monetary stance.