[Edaily Reporter Jang Young-eun ] The won is continuing to strengthen, with the won-dollar exchange rate falling to the 1,330 won range for the second consecutive day. Downward pressure on the exchange rate persists as dollar sales by exporters, the strengthening of the yen, and net buying by foreign investors in the domestic stock market all converge.

According to the Seoul Foreign Exchange Brokerage on the 8th, as of 11:35 a.m. that day, the exchange rate stood at 1,338.95 won, down 7.75 won (0.58%) from the previous trading day’s closing price. It fell as low as 1,336.3 won during the session before partially recovering.

Following a drop to 1,334.7 won at one point during the previous day’s (7th) trading session—marking the lowest level in about one year and 11 months since October 4, 2024 (1,331.3 won)—the won continues to face strong downward pressure today. News of the National Pension Service’s suspension of strategic currency hedging and speculation about dollar buying are cited as factors supporting the bottom of the range.

Min Kyung-won, a researcher at Woori Bank, analyzed, “The inflow of payment proceeds driven by strong semiconductor exports, combined with large-scale orders secured by shipbuilding and heavy industry companies, is acting as a factor increasing the supply of dollars at the beginning of the month.” He added, “Concerns over a further decline in the exchange rate are also stimulating ‘panic selling’ among market participants, which appears to be accelerating the pace of the decline.”

The strength of the yen is also cited as a factor contributing to the exchange rate’s decline. The dollar-yen exchange rate has fallen amid continued U.S. pressure to correct the weak yen and hawkish remarks from key Bank of Japan officials, while concerns over potential market intervention by Japanese authorities have further fueled yen buying. The dollar-yen exchange rate, which was in the 160-yen range as recently as the 1st of this month, is now trading in the 153-yen range.

Amid the ongoing strengthening of the won, the National Pension Service’s suspension of currency hedging has emerged as a key variable. The National Pension Service had resumed currency hedging through the sale of forward contracts last June when the exchange rate surged to the 1,500 won range, but it is reported that, as the exchange rate has recently fallen sharply, it has halted this activity and instead switched to buying dollars. Analysts say this news played a decisive role in the exchange rate, which had fallen to the 1,330-won range the previous day before rebounding to the 1,340-won range.

The market views the National Pension Service’s move as a potential catalyst for solidifying the 1,330-won range as a psychological support level. A foreign exchange dealer at a commercial bank stated, “Since the National Pension Service has temporarily suspended currency hedging at the current level, it is highly likely that the 1,330-won range will be perceived as a strong support level by the market.”

Meanwhile, the market is closely watching the U.S. Consumer Price Index (CPI) for August, set to be released on the 11th (local time), as one of the key variables that will determine the future direction of the exchange rate. Depending on the CPI results, expectations regarding the magnitude of the interest rate hike at the September Federal Open Market Committee (FOMC) meeting could change, which is expected to influence whether the exchange rate will fall further and at what pace.