South Korea Official Calls Dollar Inflows 'Rainy Season' Amid Won Gains

Moon Ji-sung, South Korea's Deputy Minister for International Economic Management, described recent dollar inflows as a 'rainy season not a shower' on the 21st. He told Yonhap Infomax after London investor meetings that won strengthening reflects structural FX supply changes, not temporary shifts. Moon cited SK Hynix ADR listing inflows and record corporate forward sales, stating 'meaningful supply-demand changes are expected in the second half' amid policy coordination with the IMF and US Treasury on exchange rates.

Corporate Forward Dollar Sales Reach 18-Year High in Q2

Moon stated that corporate forward dollar sales reached their highest level in 18 years during the second quarter according to Bank of Korea data. He noted that 'offshore NDF selling has also increased recently' and that 'corporate forward sales are expected to increase further in the third quarter.' The official added that 'foreign demand for dollars due to equity rebalancing has weakened' despite stock market uncertainties. Moon emphasized that 'dollar inflows continue steadily through current account surpluses,' creating structural supply-demand changes. He said 'we expect increased spot and forward dollar sales from semiconductor companies and other firms,' adding that 'when corporate dollar selling gains momentum, it can influence retail investor sentiment and accelerate won appreciation.'

Moon Assesses 1,480 Won Exchange Rate as Excessively High

Moon characterized the exchange rate level around 1,480 won as 'excessively high relative to South Korea's economic fundamentals.' He stated that 'not only we, but also the IMF and US Treasury, with whom we are cooperating closely, share the same view.' The official said 'unless unexpected external shocks occur, there is a high possibility of further won appreciation in the second half.' Moon added that 'the Bank of Korea's recent base rate hike decision will also help stabilize the exchange rate.'

FAQ

What did Moon Ji-sung say about dollar inflows into South Korea's FX market?

Moon Ji-sung described the recent dollar inflows as a 'rainy season rather than a shower,' indicating sustained supply rather than temporary movements. He made this characterization in an interview with Yonhap Infomax on the 21st after returning from London investor meetings.

Why does Moon expect continued won appreciation in the second half?

Moon cited structural factors including record-high corporate forward dollar sales in Q2 (highest in 18 years), steady current account surplus inflows, and expected increases in semiconductor company dollar sales. He stated that the IMF and US Treasury share the view that the current exchange rate around 1,480 won is excessively high relative to South Korea's fundamentals.