Expectations for reduced tensions in the Middle East have boosted risk appetite, causing the won-dollar exchange rate to fluctuate around the 1420 won mark.
As of 9:15 a.m. in the Seoul foreign exchange market, the exchange rate stood at 1429.5 won against the U.S. dollar.
The rate opened at 1429.6 won, down 2.9 won from the previous trading day as of 6 a.m.
U.S. Treasury Secretary Scott Vessenet indicated that the U.S. and Iran could reach an agreement to reopen the Hormuz Strait within two days.
In response, U.S. stock markets showed strong gains, with both the Dow Jones Industrial Average and the S&P 500 reaching all-time highs. Notably, the S&P 500 index hit its highest closing level since June 2, marking a two-month peak.
The easing of tensions in the Middle East also contributed to a decline in international oil prices. At the ICE Futures Exchange, October Brent crude settled at $79.36 per barrel, down 5.3%, while West Texas Intermediate (WTI) for September delivery closed at $75.77 per barrel, down 5.7% on the New York Mercantile Exchange.
Minkyu Won, an economist at Woori Bank, stated, "The market sentiment has shifted positively due to consecutive good news from the Middle East, including the establishment of shipping routes through Hormuz and the sharing of draft agreements among Gulf countries. The won, being a risk-sensitive currency, is likely to benefit from this situation."
He added, "Given the drop in international oil prices and the strength of growth stocks, we expect attempts to stabilize the exchange rate in the 1420 won range. The key factor will be whether there is sufficient inflow of export-related negotiation volumes to absorb the regional dollar demand. If rollover negotiations are included, the exchange rate could drop to the low 1420s."
* This article has been translated by AI.
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