Seoul foreign exchange dealers on May 29 forecast range-bound trading for the USD-KRW exchange rate around 1,450 won, driven by competing forces of dollar selling pressure and renewed Middle East tensions. The forecast follows Iran's ballistic missile launch at a US military base in Jordan on May 28 at 5:45 PM Eastern Time, which US forces intercepted. Dealers cited ongoing dollar sales by semiconductor companies including SK Hynix, month-end export corporate demand, and World Government Bond Index (WGBI) fund inflows as factors supporting the Korean won, while geopolitical risks and potential foreign stock selling could limit downside.
Iran Launches Missiles at US Base in Jordan on May 28
Iran fired ballistic missiles at a US military base located in Jordan on May 28 at 5:45 PM Eastern Time, according to reports reaching Seoul's foreign exchange market. US forces intercepted the missiles. Oil prices, which had been declining, reversed direction following the news. Dealers identified the geopolitical development as a potential upward risk factor for the dollar-won exchange rate.
Seoul Dealers Forecast USD-KRW Range of 1,450–1,465 Won
Three bank dealers provided exchange rate forecasts for May 29 trading. A bank dealer stated, "I hear SK Hynix dollar selling will continue, so it could fall a bit more. Previously, when we confirmed a low point, there were many cases of reversal, but we still need to be cautious at this point. These days, the won is not following other indicators but is being influenced by supply and demand. There could be a shift due to Middle East news." The dealer forecast a range of 1,450.00–1,465.00 won.
B bank dealer noted, "Semiconductor companies' dollar selling continues. However, due to news of US-Iran conflict and FOMC wait-and-see sentiment, the decline may not be large." The dealer predicted a range of 1,450.00–1,463.00 won.
C bank dealer said, "There is downward pressure from supply and demand due to month-end export corporate negotiations and WGBI fund inflows. However, if semiconductor investment sentiment continues to deteriorate, foreign stock selling could limit the decline. I expect range-bound trading." The dealer forecast 1,450.00–1,460.00 won.
SK Hynix Dollar Selling and Month-End Demand Support Korean Won
Dealers identified ongoing dollar sales by SK Hynix and other semiconductor companies as a key source of downward pressure on the USD-KRW rate. Month-end export corporate demand for won and inflows related to World Government Bond Index (WGBI) inclusion were assessed as supply-demand factors favorable to the Korean won.
In the New York Non-Deliverable Forward (NDF) market, the 1-month USD-KRW contract was last quoted at 1,452.20 won (MID). Accounting for the recent 1-month swap point of -0.20 won, this represents a decline of 10.10 won from the previous Seoul market close of 1,462.50 won. The expected trading range for May 29 was forecast at 1,450.00–1,465.00 won.
Dealers noted that continued large-scale foreign stock selling could provide additional upward pressure on the exchange rate, offsetting some of the won-supportive supply-demand dynamics.
FAQ
What exchange rate range did Seoul forex dealers forecast for May 29?
Seoul foreign exchange dealers on May 29 forecast the USD-KRW exchange rate would trade in a range around 1,450 won. Three bank dealers provided specific forecasts: A bank predicted 1,450.00–1,465.00 won, B bank forecast 1,450.00–1,463.00 won, and C bank estimated 1,450.00–1,460.00 won. The New York NDF 1-month contract closed at 1,452.20 won (MID), down 10.10 won from the previous Seoul close of 1,462.50 won.
Why did dealers expect the Korean won to strengthen on May 29?
Dealers cited ongoing dollar selling by semiconductor companies including SK Hynix, month-end export corporate demand for won, and World Government Bond Index (WGBI) fund inflows as factors supporting the Korean won. A bank dealer stated, "I hear SK Hynix dollar selling will continue, so it could fall a bit more." C bank dealer noted, "There is downward pressure from supply and demand due to month-end export corporate negotiations and WGBI fund inflows."
