The USD/KRW exchange rate closed at 1466.8 won on July 23, dropping 13.3 won from the previous close of 1480.1 won. The Korean won strengthened as Alphabet reported better-than-expected Q2 earnings and raised its annual capital expenditure outlook, while Korea's Q2 GDP growth of 0.6% quarter-on-quarter exceeded the market forecast of 0.4%. Foreign investors net purchased 2.1351 trillion won in the KOSPI market, creating downward pressure on the exchange rate as stock buying funds were converted into Korean won.
Alphabet Earnings Boost Semiconductor Investment Sentiment
Alphabet announced Q2 results that surpassed market expectations and raised its annual capital expenditure forecast. The announcement revived risk appetite as uncertainties surrounding artificial intelligence (AI) profitability and future investment scale eased. Semiconductor investment sentiment improved in response to the positive earnings report.
Foreign Investors Net Buy 2.1 Trillion Won in KOSPI
Foreign investors net purchased 2.1351 trillion won in the KOSPI market on July 23. The foreign stock buying created selling pressure on the dollar as funds were converted into Korean won. The continued decline in the exchange rate may have prompted export companies to sell their dollar holdings, with potential inflows of follow-up negotiation volumes. Expectations of dollar supply from SK Hynix's American Depositary Receipt (ADR) listing also acted as a factor capping the exchange rate's upside.
Korea Q2 GDP Grows 0.6% Quarter-on-Quarter
Korea's Q2 real GDP increased 0.6% from the previous quarter, announced in the morning of July 23. The growth rate exceeded the market expectation of 0.4%. The electrical and electronics sector including semiconductors and exports led the growth. Gross national income also increased significantly, with assessments indicating improved fundamental strength of the Korean economy. The GDP beat acted as a positive factor for the Korean won's value.
Middle East Tensions and Oil Prices Limit Won Gains
Middle East tensions and rising international oil prices limited the extent of the exchange rate's decline. Import companies' settlement demand and domestic investors' dollar demand for overseas stock purchases also supported the exchange rate's lower bound. If retail investors increase low-price buying of US technology stocks following Alphabet's earnings announcement, foreign exchange demand for overseas stock investment may rise and partially offset the won's strength.
Min Kyung-won, economist at Woori Bank, analyzed that "externally, if the European Central Bank (ECB) monetary policy meeting tonight is interpreted as hawkish, the USD/KRW exchange rate could fall further on the back of euro strength."
FAQ
What was the USD/KRY exchange rate closing price on July 23?
The USD/KRW exchange rate closed at 1466.8 won on July 23, down 13.3 won from the previous close of 1480.1 won.
Why did the Korean won strengthen on July 23?
The Korean won strengthened as Alphabet reported better-than-expected Q2 earnings and raised its capital expenditure outlook, Korea's Q2 GDP grew 0.6% quarter-on-quarter exceeding the 0.4% market forecast, and foreign investors net purchased 2.1351 trillion won in the KOSPI market.
How much did foreign investors buy in the KOSPI market on July 23?
Foreign investors net purchased 2.1351 trillion won in the KOSPI market on July 23, creating downward pressure on the USD/KRW exchange rate.
