Won's rally raises prospect of 1,200-level per dollar rate

The Korean won has strengthened significantly against the U.S. dollar in recent months, leading market observers to believe the exchange rate could dip below 1,300 won per dollar and even reach the 1,200 won mark, according to reports on Monday. The exchange rate saw a closing rate of 1,323.1 won per dollar on Seoul's foreign exchange market, a drop of 1.5 won from the session before.

This decline comes after the rate fell by more than 200 won from its typical average of 1,528 won in June, as robust semiconductor exports have compensated for the demand from overseas investors offloading Korean stocks. The advancement of the won is also evident in its nominal effective exchange rate (NEER), which gauges the currency's worth against those of its key trading partners without adjusting for inflation.

The Bank for International Settlements indicates that the won's NEER index climbed to 94.83 as of last Tuesday, up from 91.99 at the close of September. This represents the highest level since October 9, 2024, when the index hit 94.91. The NEER, which utilizes 2020 as its baseline with a value of 100, fell to 81.99 in June, signaling the won's increased strength compared to the dollar.