The won-dollar exchange rate climbed back into the 1,530 range on Friday, supported by bargain buying, as Korea's 24-hour foreign exchange trading system took effect.
The daytime closing rate in the Seoul foreign exchange market stood at 1,530.3 won as of 3:30 p.m., up 4.7 won from the previous trading day. Compared with the overnight closing rate set at 2 a.m., it rose 0.3 won. The rate began trading at 1,527.6 won at 6 a.m., up 2.0 won from the previous day, before widening its gains to reach as high as 1,537.5 won at one point during the session. The move came after the rate plunged more than 30 won on Tuesday to fall into the 1,520 range, drawing bargain-buying demand.
Foreign investors' net selling of local stocks also supported the rate's rise. Foreigners net sold about 1.3 trillion won worth of shares on the main bourse that day. It marked 12 consecutive trading days of net selling from the 19th of last month through Friday.
The dollar had weakened last week on disappointing U.S. employment data but turned stronger on Friday. The dollar index (DXY), which measures the greenback's value against six currencies, had slipped to the high 100 range the previous day before returning to the 101 range, rising 0.17% to 101.025.
The reform that took effect Friday goes beyond a simple extension of trading hours. The previous trading period, which ran from 9 a.m. to 2 a.m. the following day, has changed to open at 6 a.m. on Monday and close at 6 a.m. on Saturday, effectively operating without interruption. When New York daylight saving time ends, the opening and closing times will be pushed back one hour to 7 a.m. Trading is possible even on domestic public holidays, but settlement is processed based on Korean bank business days.
The method of setting closing rates has also changed. The previous 2 a.m. closing rate has been abolished, and a new 6 a.m. closing rate—marking 24 hours after the opening—has been introduced. The 3:30 p.m. closing rate remains unchanged. Since valuation standards for domestic companies and financial institutions are aligned with 3:30 p.m. for the time being, the market's attention is expected to focus on the closing rate at this time.
