Why did the South Korean won appreciate at its fastest pace since 2009?

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The South Korean Won Experienced Its Strongest Monthly Appreciation Since 2009 Due to Significant US Dollar Inflows

The South Korean won saw its most substantial monthly appreciation in 14 years, driven primarily by a substantial influx of US dollars into the foreign exchange market. This surge was largely precipitated by SK hynix Inc.'s successful American Depositary Receipt (ADR) offering on the Nasdaq, which led to the conversion of significant foreign currency into the local won. The won closed at 1,424 per US dollar on Friday, marking a gain of 125.4 won from the end of June, the steepest monthly increase recorded since March 2009.
SK hynix ADR Offering Fueled Dollar Inflows

A pivotal factor behind the won's rapid appreciation was the substantial amount of US dollars entering the market following SK hynix's ADR issuance. The technology giant raised approximately 40 trillion won (US$26.5 billion) through this offering. Proceeds from this offering were converted into South Korean won, directly increasing the demand for the local currency and consequently strengthening its value against the US dollar.
Strongest Monthly and Weekly Performance Against Major Currencies

In July, the won demonstrated its most robust monthly performance against the US dollar among major global currencies, appreciating by 7.95 per cent. This upward trend was also evident on a weekly basis, with the won gaining 42.6 won against the dollar in the final week of July. This represented the currency's strongest weekly performance since November 2022, highlighting a significant reversal from its position earlier in the year.
Rebound from a 17-Year Low and Positive Future Outlook

The recent strength of the won marks a significant recovery after it had fallen to a more than 17-year low of 1,599.2 won per dollar in intraday trading on July 1. Market observers and economists anticipate the won to continue its upward trajectory. Factors contributing to this positive outlook include stronger-than-expected economic growth in South Korea and the likelihood of continued interest rate hikes by the Bank of Korea, which would help narrow the interest rate differential with the United States. Economists project the won-dollar exchange rate to potentially fall to around 1,380 won.

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Why did the South Korean won appreciate at its fastest pace since 2009?

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