[Edaily Reporter Jang Young-eun ] The won-dollar exchange rate briefly fell below the 1,350 won mark during trading on the 4th. This marked the first time in about 14 months that the rate fell into the 1,340 won range.

According to the Seoul Foreign Exchange Brokerage, as of 3:30 p.m. that day, the exchange rate stood at 1,350.4 won, down 8.9 won from the previous day’s weekly closing price (1,359.3 won). After fluctuating around the mid-1,350 won range during the morning, the exchange rate gradually edged lower as the afternoon progressed. Shortly after 3:00 p.m., the exchange rate tested the 1,350 won mark before falling as low as 1,349.5 won at one point.

This marks the first time in over a year and two months—since July 1 of last year (1,348.5 won)—that the exchange rate has dipped into the 1,340-won range during intraday trading.

Although it quickly recovered to the 1,350-won level, driven by bargain-hunting, it closed the day’s trading at just above the 1,350-won mark—a significant decline from the previous day.

In terms of supply and demand conditions, it appears that foreign investors’ buying of domestic stocks contributed to the decline in the exchange rate. Foreign investors recorded net purchases exceeding 1 trillion won on the KOSPI market and a buying surplus of approximately 400 billion won on the KOSDAQ market that day.

In contrast, the value of the dollar and the yen moved in the direction of a stronger exchange rate. The U.S. Dollar Index, which measures the dollar’s value against a basket of six major currencies, is trending upward, reflecting expectations that the U.S. Federal Reserve will keep interest rates unchanged in September, and the dollar-yen exchange rate is also rising slightly (indicating a decline in the value of the yen).

Moon Da-won, an analyst at Korea Investment & Securities, stated, “While the recent pace of the exchange rate’s decline has been excessive, it is difficult to view the current level as excessively low,” adding, “Considering South Korea’s current macroeconomic situation—including growth rates, the current account balance, and expectations for the benchmark interest rate—the mid-to-high 1,300 won range appears appropriate.”

He continued, “Considering domestic and external conditions, we expect the exchange rate to decline further from here, with the lower bound falling to at least the low 1,300-won range by year-end, though the pace of decline will moderate.” He added, “At this point, we consider it highly likely that the exchange rate will drop slightly further before rebounding gradually and settling in the mid-to-high 1,300-won range.”

As recently as July 1, the exchange rate rose to an intraday high of 1,559.2 won, flirting with the 1,600-won range; however, with that point marking a short-term peak, it has plummeted by about 200 won over the past two months. Analysts suggest that market sentiment was likely influenced not only by a confluence of factors improving supply-and-demand conditions—such as the inflow of funds from SK Hynix American Depositary Receipts (ADRs) and corporate interim corporate tax payments—but also by the Bank of Korea’s consecutive benchmark interest rate hikes in July and August.