Won Strengthens by 8.81% as US-Japan Intervention Boosts Yen

The Korean won has experienced its steepest appreciation since the global financial crisis, rising by 8.81% over the past month to a high of 1,424.0 won against the US dollar. This surge in value is attributed to several factors, including SK hynix's conversion of proceeds from its American Depositary Receipt (ADR) issuance and dollar selling by exporters. The won has also benefited from yen strength resulting from joint US-Japan intervention in the foreign exchange market for the first time in 28 years.

According to data from the Bank of Korea, the won-dollar exchange rate closed at 1,424.0 won on July 31st, down 125.4 won from June's end value of 1,549.4 won. This monthly decline was the largest since March 2009 (-150.5 won), when extreme exchange rate volatility occurred during the financial crisis.

Analysts suggest that the won's strength may persist due to its high-beta nature, which makes it more susceptible to market herding and fluctuations. Stephen Chiu from Bloomberg Intelligence noted that additional strength could continue even after the SK hynix-related dollar volume is exhausted. Lee Min-hyuk from KB Kookmin Bank estimated the won-dollar rate to fall below 1,400 won in the second half, while Woori Bank predicted a low of 1,380 won.