Seoul: The South Korean won experienced a notable appreciation against the U.S. dollar on Friday, driven by substantial net purchases by foreign investors in local stocks. This surge in the won's value came after it reached a nine-month high, with market participants suspecting market-smoothing operations had taken place.
According to Yonhap News Agency, the won was quoted at 1,424 won per dollar at 3:30 p.m., marking an increase of 13.4 won from the previous day. Earlier in the day, the won traded at 1,418 won per dollar, registering its strongest level since October 20 of the previous year. Overnight, the won had climbed to as high as 1,419 won per dollar, amidst speculation of market-smoothing interventions by authorities.
Foreign investors played a significant role in this development, purchasing a net 7 trillion won (approximately US$4.9 billion) worth of local stocks during the latest trading session. This buying activity coincided with a substantial rise in the benchmark Korea Composite Stock Price Index, which surged by 17.91 percent to close at 6,595.45.
The appreciation of the won aligned with gains in the Japanese yen. During overnight trading in New York, the yen strengthened to about 158 per dollar, reaching its highest level in more than two years. Moon Ji-sung, deputy finance minister for international affairs, informed Yonhap News Agency that South Korea and Japan have been closely coordinating on this matter. However, he did not confirm whether there was a joint intervention in the open market by the two countries.
Lee Min-hyuk, an analyst at KB Kookmin Bank, noted the correlation between the won and yen, fueling speculation that both South Korean and Japanese foreign exchange authorities might have intervened in the markets. Lee suggested that the overnight strength of both currencies "could suggest the authorities in South Korea and Japan may have intervened together."