The USD-KRW exchange rate rose 0.70 won to 1,469.20 won as of 11:09 AM on May 28, compared to the previous Seoul session close of 1,468.50 won. The increase occurred as the KOSPI index plunged and foreign investors dumped stocks. The KOSPI market activated a circuit breaker, temporarily halting trading, after earlier triggering a sell-side sidecar on both KOSPI and KOSDAQ program trading. Foreign investors net sold 2 trillion won in the securities market, with the total reaching 2.7 trillion won when including KOSDAQ and NEXTRADE transactions. The three-day streak of trillion-won-scale selling supported upward pressure on the USD-KRW rate amid sharp declines in Samsung Electronics and SK Hynix share prices.
USD-KRW Opens at 1,465.00 Won and Peaks at 1,472.10 Won
The USD-KRW rate opened at 1,465.00 won on May 28 and moved upward to confirm a high of 1,472.10 won during morning trading. The rate subsequently pulled back slightly and maintained a flow around the 1,470 won level. The Seoul foreign exchange market recorded the intraday movements as foreign selling in the stock market encouraged upward attempts in the currency pair.
Foreign Investors Net Sell 2.7 Trillion Won Across Markets
Foreign investors net sold 2 trillion won in the securities market on May 28 as Samsung Electronics and SK Hynix share prices fell sharply. When transactions in KOSDAQ and NEXTRADE are combined, the net selling volume expanded to 2.7 trillion won. The KOSPI and KOSDAQ markets triggered a sell-side sidecar on program trading, followed by a circuit breaker activation on the KOSPI that temporarily suspended trading. The sustained selling over three consecutive days provided momentum for the USD-KRW rate's upward movement.
Market Participants Monitor Month-End Export Settlements and WGBI Flows
Market participants are closely watching SK Hynix's American Depositary Receipt (ADR) fund conversions and month-end export company settlement volumes. Foreign exchange conversion volumes related to the inclusion in the World Government Bond Index (WGBI) are also drawing attention as a variable. The supply-side factors have created caution among dealers regarding the sustainability of the rate's upward movement, with the upper range remaining heavy due to persistent wariness over sell-dominated supply conditions.
Bank Dealers Report Shift in Sentiment from Won Strength Expectation
A bank foreign exchange dealer stated, "We expected won strength to continue in supply terms, potentially reaching the early 1,450 won range, but the atmosphere seems to have changed a bit since yesterday. At the lowered level, export settlements are decreasing while buying is abundant." The dealer added, "There is caution regarding month-end settlements and WGBI funds, so we are moving sideways amid two-way caution. While supply is important, we need to see the direction after macro events such as the U.S. Federal Open Market Committee (FOMC) meeting conclude."
Another bank dealer assessed the situation as "a short-term oversold zone," noting that "buying has been coming in since yesterday. The flow seems to have changed a bit." The dealer mentioned, "We can build support and move up while establishing a floor. Since foreigners are selling a lot of stocks, we should look upward rather than downward."
Foreign Investors Net Sell 41,000 Dollar Futures Contracts
In the currency futures market, foreign investors net sold approximately 41,000 dollar futures contracts on May 28. The People's Bank of China (PBOC) set the USD-CNY trading reference rate at 6.7928 yuan, up 0.0017 yuan (0.03%) from the previous session. At the same time, the dollar index fell to 101.483. The USD-JPY rate recorded 163.775 yen, while the EUR-USD rate stood at 1.13745 dollars. The JPY-KRW cross rate was 897.08 won per 100 yen, and the CNY-KRW rate was 217.23 won. The offshore USD-CNY (CNH) rate rose to 6.7673 yuan.
FAQ
What caused the USD-KRW rate to rise on May 28?
The USD-KRW exchange rate rose 0.70 won to 1,469.20 won as of 11:09 AM on May 28 due to a sharp decline in the KOSPI index and foreign investors' net selling of 2.7 trillion won across securities markets. The rate opened at 1,465.00 won and peaked at 1,472.10 won during intraday trading.
How much did foreign investors sell in Korean stock markets on May 28?
Foreign investors net sold 2 trillion won in the securities market on May 28, with the total reaching 2.7 trillion won when including KOSDAQ and NEXTRADE transactions. This marked the third consecutive day of trillion-won-scale selling by foreign investors.
What factors are dealers monitoring in the USD-KRW market?
Market participants are closely watching SK Hynix's ADR fund conversions, month-end export company settlement volumes, and foreign exchange conversion volumes related to the World Government Bond Index (WGBI) inclusion. Dealers also noted that supply conditions and upcoming macro events such as the U.S. FOMC meeting will influence the rate's direction.
