The USD-KRW exchange rate declined approximately 80 won over three weeks, falling from 1,559.20 won on July 1 to around 1,480 won by late July, driven by dollar supply exceeding demand in the foreign exchange market. The decline reflects record semiconductor exports, with June exports reaching $102.25 billion — the first time exceeding $100 billion — and July 1-20 exports hitting $54.9 billion, a record for the period. The Korean government raised its 2026 economic growth forecast from 2.0% to 3.0% and projected the current account surplus at $290 billion, far surpassing last year's record $123.1 billion, as major exporters including SK Hynix actively convert dollar holdings into won.
USD-KRW Falls 80 Won in Three Weeks on Record Exports
The USD-KRW exchange rate reached 1,559.20 won on July 1, marking its highest level since 2009, before declining to around 1,480 won approximately three weeks later. Market participants expect further declines as dollar supply from export companies continues. June exports totaled $102.25 billion, surpassing $100 billion for the first time, while July 1-20 exports reached $54.9 billion, a record for the period. The government raised its 2026 current account surplus projection to $290 billion, exceeding last year's record $123.1 billion.
SK Hynix Converts $26.5 Billion ADR Funds as Exporters Increase FX Sales
SK Hynix is converting $26.5 billion (approximately 40 trillion won) raised through its recent American Depositary Receipt (ADR) listing in the United States, while simultaneously converting export proceeds. Samsung Electronics is selling dollars from advance payments received through semiconductor long-term contracts and other export earnings. Shipbuilders including Samsung Heavy Industries and HD Korea Shipbuilding & Offshore Engineering maintain high hedging ratios and execute forward exchange sales following new order announcements. Hanwha Ocean is increasing its hedging ratio to above 70%, with substantial forward exchange sales expected to continue.
Vice Finance Minister Heo Jang met with representatives from major exporters including Samsung Electronics, SK Hynix, Hyundai Motor and Kia, HD Korea Shipbuilding & Offshore Engineering, Hanwha Ocean, and Samsung Heavy Industries on July 21. Heo stated that foreign exchange supply and demand in the second half will further improve based on the solid fundamentals of the Korean economy, including continued semiconductor strength, and requested active participation in converting export proceeds, foreign currency deposits, and increasing inflows of overseas retained funds. Export companies responded that they would participate more responsibly in government efforts to stabilize foreign exchange supply and demand.
Foreign Investors Net Buy Korean Stocks Three Consecutive Days
Foreign investors net purchased stocks on the Korea Exchange, NEXT Trade, and KOSDAQ for three consecutive days through July 22. Net purchases on July 22 reached 3.4 trillion won, the largest since May 4. The trend represents a shift from previous foreign selling that contributed to the exchange rate's rise, as investors engage in portfolio rebalancing and purchases amid KOSPI corrections centered on semiconductor stocks.
Korean investors purchased $2.975 billion (approximately 4.4 trillion won) in US stocks during July, according to Korea Securities Depository. This marks the first net purchase exceeding $1 billion in four months. Investment interest intensified following the SpaceX listing, with upcoming mega-IPOs from Anthropic and OpenAI potentially sustaining overseas investment momentum.
Government Projects Continued Won Strength on Supply-Demand Shift
Moon Ji-seong, Deputy Minister for International Economic Affairs at the Ministry of Economy and Finance, stated at an investor relations event in London that "meaningful changes in supply and demand are expected in the second half." Moon emphasized that "the won's strength following SK Hynix's ADR fund inflows is not a temporary change but a shift in the supply-demand situation in the big picture," describing it as "the start of a monsoon season, not a shower."
Lee Min-hyuk, economist at KB Kookmin Bank, stated that "foreign net stock purchases and SK Hynix ADR fund conversions are improving dollar supply conditions, combined with improved terms of trade from rising semiconductor export prices and growth expectations," adding that "supply and demand and fundamentals simultaneously support won strength." Lee projected that "while fluctuations may continue near the 200-day moving average for the time being, we place weight on the possibility of eventually breaking downward," noting that "in this case, the downward trend may accelerate as high exchange rate expectations are broken."
Some market participants suggest the exchange rate has declined sufficiently, with companies potentially reluctant to sell dollars at current levels. One foreign bank FX dealer stated that "negotiation is over" and "they probably won't want to sell dollars at the current level," adding that "now we need to watch stock market movements."
FAQ
What caused the USD-KRW exchange rate to fall 80 won in three weeks?
The exchange rate declined from 1,559.20 won on July 1 to around 1,480 won by late July due to dollar supply exceeding demand in the foreign exchange market. Record semiconductor exports drove the decline, with June exports reaching $102.25 billion and July 1-20 exports hitting $54.9 billion. Major exporters including SK Hynix actively converted dollar holdings, while the government raised its 2026 current account surplus projection to $290 billion.
How much is SK Hynix converting from its ADR listing?
SK Hynix is converting $26.5 billion (approximately 40 trillion won) raised through its recent American Depositary Receipt listing in the United States. The company is conducting daily conversions of these funds while simultaneously converting export proceeds. Vice Finance Minister Heo Jang met with SK Hynix and other major exporters on July 21 to discuss foreign exchange market stabilization efforts.
What did the Korean government say about future exchange rate movements?
Moon Ji-seong, Deputy Minister for International Economic Affairs, stated at a London investor relations event that "meaningful changes in supply and demand are expected in the second half." Moon described the won's strength following SK Hynix's ADR fund inflows as "not a temporary change but a shift in the supply-demand situation in the big picture," calling it "the start of a monsoon season, not a shower." The government raised its 2026 economic growth forecast from 2.0% to 3.0%.
