The Korean won posted its strongest monthly gain against the U.S. dollar since March 2009.
The Korean won achieved its strongest monthly performance against the U.S. dollar since March 2009, strengthening by 8.81 percent in July. This sharp reversal from earlier market expectations of a weaker currency was driven by an improving dollar supply and increased sales by major exporters. Key factors included the conversion of proceeds from SK hynix's American depositary receipt offering into won, alongside a reduction in foreign selling of Korean equities. Additionally, the Bank of Korea raised its benchmark interest rate to 2.75 percent in July, narrowing the interest rate gap with the United States. Market analysts suggest the won could continue to strengthen if dollar supply remains favorable. However, some experts caution that the strength may be temporary, as future U.S. interest rate hikes and a rebound in overseas equity investment by Korean retail investors could increase demand for dollars again.