SK Hynix, dollar supply and Bank of Korea rate decision put won in focus

This week (7month 13~17day) the Seoul foreign exchange market is watching the Bank of Korea’s Monetary Policy Board and companies’ dollar transactions, as well as geopolitical risk. The market sees these variables as key factors that will determine the direction of the exchange rate.

SK Hynix could have a direct impact on foreign-exchange supply and demand through the possibility of dollar supply. Heavy industry firms’ moves to sell forward dollars are also drawing attention from the supply-and-demand side.

The possibility of renewed military conflict between the United States and Iran is also being cited as a variable in the foreign-exchange market. If geopolitical risks rise, the won could swing sharply as investors seek safe-haven assets.

Last week, the dollar-won exchange rate 1for the first time in three and a half months 1,500finished below the won mark. The market is watching to see whether this trend will continue this week.

In the market, an interest rate hike and an increase in dollar supply are seen as factors that could put downward pressure on the exchange rate. On the other hand, there are views that foreign stock flows and tensions in the Middle East could offset that pressure.

Ultimately, the exchange rate this week is expected to move amid a contest between supply-and-demand factors and external geopolitical risks.