The won strengthened to its strongest level against the dollar in 13 months as consecutive Bank of Korea rate increases narrowed the policy-rate gap with the US. The won closed at 1,372.5 per dollar in Seoul daytime trading on Aug. 28, the lowest exchange rate since July 24, 2025, when it was 1,367.2. The dollar later recovered after Federal Reserve Chair Kevin Warsh reaffirmed his commitment to price stability in a Jackson Hole speech, leaving the exchange rate at 1,379.5 as of 6 a.m. on Aug. 29. The Bank of Korea's benchmark rate rose to 3.0%, reducing the gap with the upper end of the US policy rate, at 3.75%, to 0.75 percentage point, the narrowest since November 2022. Samsung Electronics and SK Hynix have announced major investments in domestic semiconductor facilities, potentially increasing dollar selling as they convert overseas earnings into won and secure funds for shareholder returns. The Institute of International Finance said South Korea's current-account surplus (when inflows exceed outflows) could reach 10% of gross domestic product by next year. NH Investment & Securities analyst Kwon Ah-min said the exchange rate could fall to 1,340 to 1,350 once conversion demand from the two companies begins in earnest. In the bond market, investors priced in a slower pace of future Bank of Korea tightening. The three-year Korean Treasury bond yield ended Aug. 28 at 3.788%, down 0.066 percentage point from a week earlier, after the central bank raised its benchmark rate to 3.0% on Aug. 27. The median six-month policy-rate projection from Monetary Policy Board members was 3.25%, which markets interpreted as a signal that the central bank may monitor conditions before adjusting the pace of further increases.