Won Surges 15% Against Dollar, Outpacing Major Currencies in Q3

The South Korean won (KRW) has made significant gains in Q3, appreciating by over 15% against the US dollar. This is a substantial increase compared to other major currencies, with the Japanese yen coming in second at around 5.84%. The won's strength is attributed to factors such as dollar selling by semiconductor and export companies, reduced foreign equity outflows, and a narrowing U.S.-South Korea interest rate gap.

According to Moon Jung-hee, chief economist at KB Kookmin Bank, the reduction in foreign equity outflows has been significant, from $21.5 billion in February through early July to $2.3 billion from July to September. Baek Seok-hyun, an economist at Shinhan Bank's S&T Center, notes that the semiconductor effect is being priced in belatedly.

The rapid appreciation of the won has led to increased volatility in the exchange rate, with the average daily trading range widening to 67.8 won as of September 11. This heightened volatility makes it challenging for companies to set import and export prices and devise currency-hedging strategies.