The currency strengthened as much as 1.3%, reaching 1,334.70 per dollar, a level last seen in October 2024. A quick gauge of how fast things are moving, the relative strength index, climbed to its most elevated reading since 2013.
Semiconductor heavyweights Samsung Electronics Co. and SK Hynix Inc. led the stock advance. Adding to the move, overseas funds accumulated a net 1.8 trillion won in Korean shares on the Kospi Index - about $1.3 billion. Exchange figures show overseas buying has now continued for a third session, helping lift the currency.
By the afternoon, the won's advance cooled to a 0.4% gain versus the dollar. Geoffrey Yu of Bank of New York Mellon, where he serves as a senior strategist, said, "The Korea won strength, at around 6% year to date, also looks increasingly stretched and could encourage domestic asset managers to unwind foreign-asset hedges or prompt renewed retail outbound equity investment." Separately, Yonhap Infomax reported the National Pension Service paused foreign-exchange hedging and restarted buying dollars. After Bloomberg News contacted it, the pension fund provided no comment.
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"With long-won positions having built up broadly in recent weeks, the report was seen as a signal that authorities may be growing uncomfortable with the pace of the currency's gains, prompting dollar short-covering," said Paik Seokhyun, economist at Shinhan Bank in Seoul. There is a clear bid for Korean assets that could keep the won supported, but the speed of the climb may be tougher to maintain. For anyone with Asia exposure, it is a reminder that strong trends can run long, then pause fast.
