South Korean won rebound drives retail buying of dollars and yen

  • South Korean retail customers exchanged dollars and yen worth 1.47 trillion won.
  • Five major banks exchanged $686 million and 61.9 billion yen through Aug. 27.
  • Corporate dollar conversions and Bank of Korea rate increases supported the won.

The South Korean won has rebounded sharply in the second half, with the won-dollar rate falling 176.9 won to 1,372.5 per dollar on Aug. 28 from 1,549.4 at the end of June. The won-yen rate also declined to 860.61 won per 100 yen from 954.95 over the same period. Corporate dollar conversions, reduced foreign stock selling and consecutive Bank of Korea rate increases have supported the won, while Japan's relatively low interest rates have weighed on the yen. Retail customers at five major South Korean banks exchanged 1.47 trillion won, or about $1.06 billion, into dollars and yen during July and August through Aug. 27. Dollar and yen deposits also rose, and banks including Toss Bank, KakaoBank, Woori Bank and Shinhan Bank are expanding fee-free exchange services, automatic purchase tools and foreign-currency deposit products. Analysts say the won-dollar rate could fall to 1,350 this year if Samsung Electronics and SK Hynix increase shareholder returns and domestic investment, while further currency declines remain possible and investors face conversion costs when selling foreign currency.

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