South Korean Won Holds Near 13-Month High on Semiconductor Export Boom

The South Korean won hovered close to 1,373 per dollar this week, holding near its strongest level in roughly 13 months as a surge in semiconductor exports fueled fresh dollar inflows and encouraged local exporters to convert their overseas earnings.

The currency's resilience tracks a blowout month for Korea's trade sector. Exports jumped 68.7% year-on-year to $98.25 billion in August, while the trade surplus widened to $34.75 billion, according to customs data. Semiconductor shipments were the standout performer, soaring 209% from a year earlier to $46.65 billion, driven largely by insatiable global demand for memory chips and other components used in AI data centers and servers.

Analysts say the scale of the chip export rebound reflects Korea's central role in the global AI buildout, with companies racing to secure high-bandwidth memory and advanced logic chips. That demand has translated directly into stronger dollar receipts for exporters, many of whom have been converting proceeds into won near month-end, adding a further technical tailwind to the currency.

Monetary policy has also played a supporting role. The Bank of Korea has kept its benchmark rate at 3%, a stance that, combined with an improving growth outlook, has helped underpin sentiment toward Korean assets. Fiscal policy is reinforcing that momentum too: the government's record budget proposal for 2027 channels additional funding toward semiconductors, artificial intelligence and other strategic growth industries, signaling sustained state support for the sectors driving the export surge.

Not all the external signals are favorable, however. Renewed military tensions between the United States and Iran have pushed oil prices above $91 a barrel, stoking concerns about imported inflation for energy-dependent Korea. Meanwhile, rising US Treasury yields and expectations that the Federal Reserve may hold policy tighter for longer could limit how much further the won can appreciate in the near term.

For now, traders appear to be weighing Korea's strong trade fundamentals against these external headwinds, keeping the won range-bound just off its multi-month peak as markets await further signals on both the chip cycle and global monetary policy.