With the South Korean won having recently gained strength, the record gain of the Taiwanese dollar, sparked by speculation about Taiwan's trade talks with the US, sent other Asian currencies rallying and further pushed up the value of the won.
The Korean won appreciated against the US dollar in offshore trading, with the one-month non-deliverable forward contract quoted at 1,372.9 won on the New York forex market.
If this level were to hold, the Korean won would open in the 1,370 won range against the US dollar in daytime trading on Wednesday.
The Korean won’s gain against the greenback became more pronounced on Friday, when it closed after-hours trading at 1,401.5 won per dollar, gaining 19.5 won from the previous trading session. During trading hours, it hovered in the upper 1,390 won range, crossing below 1,400 won for the first time in five months.
The won's appreciation is partly the result of the record rally of the Taiwanese dollar. The Taiwanese currency surged 5 percent on Monday, marking its biggest gain since 1988, as traders priced in speculation that the Taiwanese authorities might allow their currency to appreciate to help reach a trade deal with the US. The surge has sent other Asian currencies, including the Korean won, on a rally.
While the Taiwanese central bank has denied speculation that the US asked the country to deliberately raise the value of the Taiwan dollar, the forex market continues to fluctuate.
After hitting 1,487.6 won to the dollar on April 9 -- one of its weakest points since the US country-specific reciprocal tariffs took effect -- the won has been regaining strength as traders priced in anticipation that the US would soften its tariff policy through trade talks with partner countries.
Yet forex trade remains volatile.
On Friday, the last trading day before a holiday weekend, the won’s value per dollar fluctuated by 34.7 won during daytime trading, marking the largest fluctuation since a 37.4 won move on Nov. 11, 2022.
According to the Bank of Korea, the average daily fluctuation in the won-dollar rate for April was 9.7 won, or 0.9 percent, marking the highest volatility since November 2022.
"It is good to hear that the won-dollar currency rate fell to the 1,300-won range amid the strengthening of Asian currencies," BOK Gov. Rhee Chang-yong said at a press conference held in Milan on Monday. The conference was held on the sidelines of the annual meeting of the Asian Development Bank.
"But considering the recent situation of high volatility, it is hard to determine whether (the won-dollar rate) will remain at a similar level."
silverstar@heraldcorp.com
