Lead

The South Korean won has strengthened sharply against the U.S. dollar, posting its fastest monthly gain since 2009, according to Yonhap News Agency. The appreciation was driven largely by heavy dollar inflows following SK hynix Inc.'s American depositary receipt (ADR) offering on the Nasdaq, with market experts attributing the currency's rebound to the conversion of the chipmaker's proceeds into the local currency.

The won was quoted at 1,424 per U.S. dollar at 3:30 p.m. Friday, up 125.4 won from the end of June, Yonhap reported, citing foreign exchange data. That marked the largest monthly gain since March 2009, when the won strengthened by 150.5 won against the dollar in the aftermath of the global financial crisis.

Coverage comparison

Yonhap's coverage of the currency's movement spans two reports. The first, published on Aug. 2, focused on the monthly performance, while a second report on Aug. 11 detailed the won's continued gains in early August. Both reports attributed the won's strength to dollar inflows from SK hynix's ADR offering, with analysts quoted in both stories pointing to the conversion of proceeds into the local currency as a key driver.

The two reports provide slightly different figures for the amount raised in the ADR offering. The Aug. 2 story cited about 40 trillion won (US$26.5 billion), while the Aug. 11 report cited the same 40 trillion won but converted to US$28.2 billion. The discrepancy appears to reflect different exchange rates used at the time of reporting.

The later report also noted that the won's gain on Tuesday marked its strongest level since Oct. 2 of the previous year, and it highlighted net purchases of local stocks by foreigners during the session.

Key claims

  • The won appreciated at its fastest monthly pace since 2009, with the monthly gain the largest since March 2009, Yonhap reported.
  • The won was quoted at 1,424 per U.S. dollar at 3:30 p.m. Friday, up 125.4 won from the end of June, according to Yonhap.
  • The currency rebounded steadily after falling to a more than 17-year low of 1,599.2 won per dollar in intraday trading on July 1, Yonhap reported.
  • SK hynix Inc. raised about 40 trillion won through its ADR offering on the Nasdaq, Yonhap reported.
  • The won gained slightly against the U.S. dollar on Tuesday, quoted at 1,415.9 won per dollar at 3:30 p.m., Yonhap reported.
  • Foreigners bought a net 44.2 billion worth of local stocks during the latest trading session, with the Korea Composite Stock Price Index moving up 0.73 percent, Yonhap reported.

Market context and outlook

Yonhap reported that the won's monthly appreciation was the strongest among major currencies in July, with the won gaining 7.95 percent against the dollar, followed by the Japanese yen at 3.15 percent, the Swedish krona at 1.91 percent, and the British pound at 1.63 percent, according to data compiled by Yonhap Infomax.

Market experts cited in Yonhap's reporting attributed the won's strength to heavy dollar inflows after SK hynix converted proceeds from its ADR offering into the local currency. The company is expected to use most of the funds for domestic investments, including the Yongin semiconductor cluster, according to the report.

Economists quoted by Yonhap expect the won to remain on an upward trajectory, citing stronger-than-expected economic growth and expectations that the Bank of Korea will continue raising interest rates, narrowing the rate differential with the U.S. Federal Reserve.

The won's gains also came amid active foreign buying of local stocks. Yonhap noted that foreigners bought a net 44.2 billion won worth of local stocks during the latest trading session, helping to push the benchmark KOSPI up 0.73 percent to close at 6,345.53.

As of the Aug. 11 report, the won had opened at 1,415.9 won per dollar and rose to as high as 1,412.2 won during afternoon trading, Yonhap said.