Won breaks into 1,300s despite Kospi rout

The won broke into the 1,300-per-dollar range Wednesday for the first time in more than 10 months, defying a steep Kospi selloff as weak US data pressured the dollar and Korean exporters sold more of their dollar holdings.

The won opened at 1,413.3 won per dollar in Seoul’s onshore trading, and extended its appreciation throughout the morning session. It eventually fell below the 1,400 won mark just before noon, marking the first time it has traded at the 1,300-won level since Oct. 2. The won was quoted at 1,398 per dollar as of 2:20 p.m.

The won’s appreciation was attributed in part to mounting pressure on the dollar following weaker-than-expected US economic indicators. The dollar weakened on expectations that the US Federal Reserve will leave its benchmark interest rate unchanged next month. The dollar index, which measures the greenback’s value against a basket of six major currencies, fell below the 100 level to around 99.

Dollar-selling by exporters looking to convert their dollar earnings into won is also believed to have contributed to the won’s appreciation. While companies have traditionally sold dollars toward the end of the month, they have recently been selling their dollar holdings more frequently as the won strengthens.

The shift marks a stark change from just two months ago. The won’s value per dollar weakened to 1,561.5 won during overnight trading on June 6, driven by heightened tensions in the Middle East, rising global oil prices and a stronger dollar.

It was the weakest level of the won since March 2009, during the global financial crisis, marking a 17-year low.

In July, the won began to gain its value against the dollar. After hovering around 1,550 won per dollar in early July, it appreciated to the 1,480-per dollar range by midmonth and was quoted at 1,424 per dollar at the close of main trading hours on July 31.

The won’s appreciation Wednesday came despite a massive foreign selling spree on the benchmark Kospi. Offshore investors had offloaded 2.69 trillion won worth of Korean stocks on the main bourse, sending the index down 5.72 percent to 6,476.57 as of 2:20 p.m.