The Korean Won / US Dollar exchange rate fell within a day due to expectations of US-Iran negotiations.

The South Korean won against the US dollar fell on the 14th, influenced by expectations of additional negotiations between the US and Iran and a rally in the domestic stock market, closing lower for the day.

In the Seoul foreign exchange market, the intra-day closing price of the won against the dollar (based on 3:30 PM) was 1,481.2 won, down 8.1 won from the previous trading day. This reversed the previous day’s rise of 6.8 won, which closed at 1,489.3 won. At the same time, the US dollar index, which measures the dollar’s value against six major currencies, fell 0.65% to 98.354, easing dollar strength.

The foreign exchange market was sensitive to diplomatic developments related to Middle East tensions that day. Although the US-Iran peace talks held in Islamabad, Pakistan, on the 11th and 12th failed to reach a conclusion, reports indicated that informal contacts were ongoing, alleviating some market anxiety. If the possibility of easing geopolitical tensions increases, demand for safe-haven assets like the dollar will decrease, and risk appetite for assets may recover. The decline in the exchange rate that day was interpreted as reflecting this expectation. US Vice President JD Vance also stated in an interview with Fox News that further dialogue and a final agreement are not entirely ruled out.

The surge in the domestic stock market also supported the won’s strength. The Korea Composite Stock Price Index (KOSPI) rose 159.13 points (2.74%) from the previous day, closing at 5,967.75 points; foreign investors net bought about 8.62 trillion won worth of stocks on the Korea Exchange. Foreign investors buying domestic stocks need to convert funds into won, which increases demand for the won in the foreign exchange market and puts downward pressure on the won against the dollar. The Korea KOSDAQ index also rose 22.04 points (2.00%) to 1,121.88, supporting overall investor sentiment improvement.

Looking at other currencies, the Japanese yen against the dollar fell 0.28%, to 159.228 yen. The corresponding won-yen cross rate (based on 3:30 PM) was 930.14 won per 100 yen, down 2.5 won from the same time the previous day. The Tokyo stock market’s Nikkei average also rose 1,374.62 points (2.43%) to 57,877.39 points. Market analysts believe that the future won-dollar exchange rate will likely remain sensitive and fluctuate based on the progress of Middle East negotiations, the direction of the dollar index, and foreign capital inflows.