The won/dollar rate fell for a third straight session, with the won strengthening, before trimming further gains in the low 1,340s, taking a breather after a sharp drop.
The won/dollar rate closed at 1,343.6 in Seoul on the 6th, down 0.4 won from the previous session. That was the strongest close since Sept. 10, when the currency finished at 1,339.2. It touched 1,341.0 during the day.
The currency opened at 1,342.0, rose as far as 1,346.7 early in the session and then slipped to 1,341.0, moving within a narrow band in the low-to-mid 1,340s. The move largely reflected a correction after a short-term plunge over the three-day holiday, with exporters' dollar selling running up against importers' settlement demand.
Broad dollar strength limited the won's gains. The dollar index, which tracks the greenback against six major currencies, hovered around 102, while the dollar rose to about 158 yen. U.S. Treasury yields extended their climb overnight, with the 10-year yield rising to 5.34%, the highest since 2002.
Foreign selling of South Korean stocks also helped put a floor under the won-dollar rate.
Market participants expect further declines to be limited, as settlement demand tends to emerge in the 1,330s. Conversely, even if broad dollar strength and foreign equity selling persist, they see the upside likely capped near 1,380.
Separately, Lee Hyoung-il, deputy prime minister and minister of finance and economy, said on the 6th that the government would work actively to stabilize a foreign exchange market facing uncertainty in both directions from the war in the Middle East and monetary policy in major economies. Speaking at a parliamentary audit by the National Assembly's Finance and Economic Planning Committee, he also said the government would press ahead with efforts to internationalize the won without disruption.
