On June 5, the won-dollar exchange rate fell to the 1,350 won range for the first time in about eight months. This was influenced by the global weakening of the dollar and foreign investors’ net buying in the domestic stock market, driven by increased risk appetite.
On this day, the won-dollar exchange rate in the Seoul foreign exchange market closed weekly trading (as of 3:30 p.m.) at 1,358.4 won, down 11.1 won from the previous trading day. This is the lowest level since October 14 of last year (1,355.9 won). The exchange rate opened at 1,363.5 won and fell as low as 1,355.7 won during the morning session.
Concerns about a U.S. economic slowdown, triggered by weaker employment and service sector indicators, led to a weaker dollar. According to U.S. private labor market research firm ADP on June 5 (local time), new private sector jobs in May increased by 37,000, which is significantly below the market expectation of 111,000 and marks the lowest figure in two years. Previously, on June 4 (local time), the Institute for Supply Management (ISM) announced that the U.S. services Purchasing Managers’ Index (PMI) for May was 49.9, down 1.7 points from the previous month’s 51.6. This is the first time in about a year, since June of last year, that the U.S. services PMI has fallen below the baseline of 50. The dollar index, which measures the value of the dollar against the currencies of six major countries, fell 0.39% from the previous day to 98.866.
Strong net buying by foreign investors in the domestic stock market for two consecutive trading days also supported the strength of the won. On this day, foreign investors made net purchases of approximately 924.1 billion won in the KOSPI market. For two consecutive days, they bought nearly 1 trillion won per day. This was driven by increased risk appetite and expectations for stock market stimulus from the new government. President Lee Jaemyung pledged to usher in the 'KOSPI 5000 era' through amendments to the Commercial Act. On this day, the KOSPI closed at 2,812.05, up 1.49% from the previous day.
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