As yen depreciation accelerates, the won is increasingly decoupling from the yen. On 31 August, the won/yen rate reached KRW 859.3, or approximately KRW 859 per ¥100. The won also strengthened against the dollar, approaching the 850-won range.
On 31 August, the won/yen rate released by the Seoul Foreign Exchange Brokerage was ¥100 = KRW 859.3, putting it in the 850-won range for the first time in approximately 2 years and 1 month since 11 July 2024. This highlights the relatively more difficult conditions for exchanging won into yen.
The won was also firm against the dollar, with the won/dollar rate in the Seoul foreign exchange market ending trading that day at KRW 1,368.6 per dollar. Strong semiconductor exports, an expanding current-account surplus and the effects of the Bank of Korea's rate hike have combined to put the won on an upward trajectory.
The Bank of Korea raised its policy rate by 0.25 percentage points to 3% annually on the 27th of last month. While saying that the foreign exchange market was stable, the governor of the Bank of Korea stated that "there is room for further won appreciation" and indicated a policy of continuing to pursue monetary policy proactively.
Market views that the won will continue to decouple remain widespread. Experts are divided between the view that the scope for further yen intervention is limited and the view that the factors supporting won appreciation will continue gradually. Against this backdrop, attention is also focusing on trends in yen funds and investors' yen deposit balances.