Won strengthens on robust exports, increased dollar supply

SEOUL, Oct. 18 (Yonhap) -- The Korean won has strengthened against the U.S. dollar amid an increase in dollar supply driven by robust exports, central bank data showed Sunday.

The Korean won traded at an average of 1,342.6 won per dollar during the first 12 trading days of October, marking the lowest since September 2024, when the average won-dollar exchange rate was 1,332.8 won, according to data from the Bank of Korea (BOK) Economic Statistics System.

The monthly average exchange rate rose to 1,492.5 won in March in the aftermath of the war in the Middle East and to 1,528 won in June amid rising crude oil prices and foreign stock selling.

The won has strengthened since as exporters sold dollars in the market, with the monthly average exchange rate falling to 1,488.9 won in July, 1,404.4 won in August and 1,358.8 won in September.

The exchange rate fell further to 1,328.9 won as of 7:20 p.m. Friday, marking the lowest point since 1,317.1 won recorded on Oct. 2, 2024.

Experts said South Korea's trade surplus and ample dollar supply have supported the won's appreciation.

"The foreign exchange market saw a trend of dollar selling driven by the semiconductor boom," said Baek Seok-hyun, an economist at Shinhan Bank's S&T Center. "The average daily trade surplus in September approached US$2.5 billion, while net selling of Korean stocks by foreign investors fell far short of that figure."

South Korea's solid economic growth and the central bank's monetary tightening have also supported the won.

The International Monetary Fund raised South Korea's growth forecast to 3.3 percent for 2026, citing strong semiconductor exports that more than offset the fallout from the war in the Middle East.

The BOK lifted its benchmark interest rate to 3 percent through consecutive rate hikes at its July and August meetings, signaling the possibility of further increases.

Experts expect the won to trade in the low- to mid-1,300-won per dollar range through the end of the year.

"Given upward pressures such as geopolitical risks in the Middle East, oil price concerns, and capital outflows from the stock market by foreign investors due to worries about the artificial intelligence (AI) industry, exchange rate volatility is expected to persist for the time being," said Lee Yoo-jung, an analyst at Hana Bank.

Meanwhile, the won traded at a monthly average of 849 won per 100 Japanese yen in October, its strongest level since December 2007, when the rate averaged 829.2 won, according to the data.