The won-dollar exchange rate is fluctuating in the high 1470s as geopolitical risks in the Middle East coincide with a favorable supply-demand situation for dollar selling.
According to the Seoul foreign exchange market on July 21, the exchange rate for the won against the U.S. dollar was trading at 1,477.8 won as of 9:10 a.m.
The rate started the day at 1,477.9 won, down 0.5 won from the previous day's closing price as of 6 a.m.
According to the White House, U.S. forces conducted additional airstrikes on military targets in Iran related to missiles and drones on July 20 (local time). President Donald Trump stated that this operation was a retaliatory measure for attacks on commercial vessels in the Strait of Hormuz and the deaths of U.S. troops.
International oil prices continued to rise amid escalating tensions in the Middle East. Brent crude futures for September delivery closed at $89.22 per barrel, up 1.27% from the previous trading day, while West Texas Intermediate (WTI) crude futures for August delivery finished at $83.23 per barrel, a 0.90% increase.
However, in the foreign exchange market, the favorable supply-demand situation for dollar selling is contributing to the decline in the exchange rate.
Min Kyung-won, an economist at Woori Bank, explained, "This month, a significant amount of currency hedging from exporters and heavy industry companies has flowed into the foreign exchange market, leading to a lower exchange rate level. Additionally, considering the pending dollar selling demand due to the listing of SK Hynix's ADR, expectations for a favorable supply-demand situation for dollar selling have increased."
He added, "The recent trend of the won showing a somewhat different pattern compared to other global currencies also supports this. Despite the sluggish domestic stock market, the undervaluation appeal has emerged, prompting foreign investors to respond with net buying, which is a background for the decline in the exchange rate."
* This article has been translated by AI.
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