The won has strengthened to a two-year high, with the exchange rate falling for four straight days. Who gains and who loses when the won gets stronger?
2026-10-22
The Star of Won Strength Is Semiconductors
The exchange rate has fallen to 1,325.2 won, the lowest since October 2024. The report attributes this to exporters selling dollars. The key point is that those exporters are effectively semiconductor companies. Kyunghyang Shinmun identified the semiconductor super-boom as the driving force behind the won's strength, explaining that dollars earned from chip exports are being supplied in large amounts to the currency market (Kyunghyang Shinmun, 2026-10).
When the exchange rate moves this way, even exporters see different outcomes. Semiconductors are an industry where global demand outstrips supply, so they can raise dollar prices to offset currency losses. Autos and petrochemicals face fierce competition and cannot. Eugene Investment & Securities saw the decline in the exchange rate widening this kind of divergence among industries (Herald Business, 2026-09).
An Asymmetry of Winners and Losers
| Group | Impact | Basis |
|---|---|---|
| Semiconductors | Can defend by raising dollar prices; foreign currency-gain incentive | Foreign net buying of 664.6 billion won on the KOSPI concentrated in Samsung Electronics and SK Hynix |
| Autos | Lower earnings in won terms | 10-21: Hyundai Motor -0.16%, Kia -1.6% |
| Import-heavy companies and overseas travel | Lower costs and expenses | Easier dollar settlement burden |
| Overseas stock investors | US ETFs bought when the rate was higher suffer currency losses | Lower won value of dollar assets |
The last row is a link the report does not make. Someone who bought a US ETF with won sees lower won gains for the same dollar return if the rate falls to 1,325 won. With an unhedged ETF, the exchange-rate change is added directly to returns.
The Flip Side of Semiconductor Dependence
According to the report's citation of E-Focus, the semiconductor trade surplus ($19.94 billion) for October 1-20 is larger than the overall surplus ($14.496 billion). If dollar supply comes from semiconductors, the basis for won strength disappears together with the chip cycle when it turns. It also needs to be taken into account that, with 13 working days versus 10.5 last year, part of the growth rate is an illusion.
What Should Investors Do?
- Some forecasts say the exchange rate could go below 1,300 won (Eugene Investment & Securities, 2026-09). Combined with another brokerage's short-term forecast of 1,320-1,360 won, the range is wide. It is better to convert in installments than all at once.
- For auto stocks, earnings estimates could be cut if the stretch of won strength lasts. Use whether the rate goes below 1,320 won as one checkpoint.
- Those with large overseas ETF weights should first check their mix of hedged and unhedged products.
- If today's Bank of Korea meeting hints at a November hike, won strength could gain more momentum. In that case, the earnings burden on exporters grows as well.