Won strengthens to 1,503 level as US-Iran ceasefire deal calms markets

By Kim Byeo-ri, The Herald Business

The won-dollar exchange rate dropped to the low 1,500s Monday as a US-Iran ceasefire agreement combined with news of coordination between South Korean and US monetary authorities to boost the Korean currency.

The won opened the week at 1,511.4 per dollar in the Seoul foreign exchange market, strengthening 8.4 won from the previous session. It briefly weakened to 1,512.2 before resuming its advance, falling to 1,503.95 as of 9:27 a.m. That intraday low was the strongest the won had traded against the dollar since June 1, when the rate touched 1,500 — a 14-day trough on an intraday basis.

The won's strength reflected a broad rise in global risk appetite following the US-Iran ceasefire. The dollar index, which measures the greenback against six major currencies, slipped to the mid-99 range.

President Donald Trump announced Sunday at around 5:30 p.m. local time on social media that "a deal with the Islamic Republic of Iran has just been completed." The announcement in effect ended the Iran war that began Feb. 28 — 106 days after it started. A formal signing ceremony is scheduled for June 19 in Switzerland.

Trump added that the Strait of Hormuz would be reopened and that the US naval blockade of Iran would be lifted immediately after the agreement was signed.

International oil prices also fell. West Texas Intermediate futures dropped to around $80 per barrel, while Brent crude for delivery traded near $84 per barrel.

News that South Korean and US monetary authorities agreed over the weekend to coordinate in response to won weakness provided additional support for the currency.

Moon Ji-seong, assistant minister for international affairs at the Ministry of Economy and Finance, visited the United States on June 12 and met with senior Treasury Department officials to discuss recent foreign exchange market trends. Both sides emphasized that the won's recent weakness is difficult to justify and appears excessive given South Korea's economic fundamentals.

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https://biz.heraldcorp.com/article/10770996