Risk asset appetite: USD-KRW exchange rate closes at 1,447 KRW... influenced by the warm US stock market

The USD-KRW exchange rate initially rose in the New York foreign exchange market before partially retracing, ultimately closing at 1,447 KRW. Analysts believe that the strong performance of the New York stock market has stimulated risk asset appetite, leading to a relatively strong Korean won.

As of 2:00 a.m. on the 7th (Korea time), the USD-KRW exchange rate closed at 1,447.10 KRW, up 3.30 KRW from the previous day’s Seoul foreign exchange market close of 1,443.80 KRW. During the early trading hours in New York, the euro weakened due to soft European economic indicators, and the dollar remained strong, with the USD-KRW rate rising to a high of 1,449.30 KRW, setting an intraday high.

However, as the US stock market showed an upward trend, investors shifted their investment focus from safe assets to risk assets such as stocks, and demand for the dollar began to decrease. Notably, the Philadelphia Semiconductor Index, composed of representative US semiconductor stocks, surged 2.84% intraday, indicating a clear tech-led rally. As a result, the exchange rate slightly declined again, dipping to 1,447.00 KRW at one point during the day.

Geopolitical variables that could impact the foreign exchange market, such as the situation in Venezuela, had little to no actual effect. ING foreign exchange expert Francesco Pessol assessed that, despite about 48 hours passing since the US took military action, the exchange rate market showed no obvious signs. He explained that the dollar briefly attracted safe-haven attention during Monday morning trading, but the impact quickly dissipated.

Throughout the day, the highest point of the USD-KRW exchange rate was 1,449.60 KRW, and the lowest was 1,442.80 KRW, with a daily fluctuation of 6.80 KRW. The total spot FX trading volume, including overnight trading, based on data from Seoul foreign exchange brokers and Korean capital brokers, reached $14.533 billion. This indicates active buying and selling activity in the market.

Future exchange rate trends are likely to be influenced by US stock market movements, the release of major global economic indicators, especially US interest rate policies and the pace of European economic recovery. Some observers believe that if risk asset appetite continues, the won could remain strong in the short term, but if market uncertainty re-emerges, the exchange rate could rise again.