돈經濟

As of August 2026, the won-dollar exchange rate is trading in the early to mid-1410s. Compared to the peak of around 1560 won just two months ago in June, when Middle East risks and large-scale foreign selling coincided, it has already experienced a significant decline. If we assume a scenario where the exchange rate further drops to 1350 won at this point, the impact on the Korean economy and stock market cannot be simply summarized as a 'positive for a strong won.' With an export-oriented growth structure, a stock market extremely concentrated in semiconductors, and the decoupling of stock prices and exchange rates that became evident in the first half of 2026, volatility is more likely to increase. It is necessary to examine the structural changes and market dynamics that a falling exchange rate will bring.

From a macroeconomic perspective, a strong won has a dual nature. On the import side, there are clear positive effects. As the won-denominated cost of items with a high proportion of dollar payments, such as crude oil, natural gas, raw materials, semiconductor equipment, and materials, decreases, the cost burden on companies is alleviated, and inflationary pressure on consumer prices also slows down. Given Korea's high dependence on energy imports, this has a significant potential to lead to inflation suppression and an improvement in households' real purchasing power. The costs of overseas travel and study, as well as corporate overseas investments and M&A, also decrease. The repayment burden on companies and households with foreign currency debt is also reduced. Thus, stable import prices and enhanced purchasing power can act as factors that expand the potential for domestic demand recovery.

However, the export sector experiences the opposite pressure. In a structure where a significant portion of Korean exports are settled in dollars, if the exchange rate falls, the sales and operating profit, when converted to Korean won, shrink even with the same dollar sales. Especially considering the experience in the first half of 2026, when semiconductor exports significantly expanded year-on-year and the high exchange rate further inflated conversion profits, thereby increasing the current account surplus, an exchange rate of around 1,350 won largely reverses this 'exchange rate effect.' In the case of Samsung Electronics and SK Hynix, past analyses have shown a sensitivity where quarterly operating profit fluctuates by tens of billions to hundreds of billions of won for every 10 won movement in the won-dollar exchange rate. If the exchange rate falls from 1,410 won to 1,350 won, the profit buffer enjoyed during the high exchange rate period will rapidly shrink, likely weakening the earnings visibility of export companies. Other major export industries such as automobiles, shipbuilding, and defense will also face similar pressures.

The problem is that this process does not proceed smoothly. If the exchange rate falls rapidly, export companies may choose strategies such as lowering dollar-denominated prices to maintain price competitiveness or expanding overseas local production. While this may be positive for export volumes in the short term, it could negatively impact domestic employment and facility investment. Conversely, if the exchange rate decline is gradual, companies can gain time to adapt, but in the process of reaching a specific level like 1,350 won, the market must already undergo significant expectations and position adjustments. If the current account surplus continues and foreign capital flows in net, the exchange rate decline can be interpreted as a result of improving economic fundamentals. However, if the experience of foreign stock selling and rebalancing pushing up the exchange rate, as seen in the first half of 2026, is repeated, the opposite path is also possible.

The relationship with the stock market is more complex. Traditionally, a weaker won has been favorable for the KOSPI, driven by expectations of improved performance from export companies. However, in 2026, this formula largely broke down. Even as the KOSPI surged on the back of a semiconductor supercycle and expectations of AI demand, foreigners continued large-scale net selling to adjust portfolio weightings and realize profits, which in turn put upward pressure on the exchange rate. A clear 'decoupling' emerged, where stock prices rose while the won weakened. In this situation, if the exchange rate falls to 1,350 won, it could temporarily improve the won-denominated asset conversion returns for foreign investors. This is because for investors holding Korean stocks in dollar terms, a stronger won means exchange rate gains. If foreign net buying resumes and is coupled with adjustments in the foreign investment currency hedging ratio by institutions like the National Pension Service, there is potential for increased capital inflow into the stock market.

Conversely, if a falling exchange rate worsens the earnings outlook for export companies, especially large semiconductor stocks which dominate market capitalization, overall market volatility will increase. If concerns spread that the earnings momentum of the semiconductor sector will slow, the narrow rally that has driven the market could falter, accelerating sector rotation. As capital shifts from export-related stocks to domestic demand/import-dependent sectors, or to interest-rate-sensitive financial and real estate-related stocks, the fluctuation range of the index itself is likely to widen. Furthermore, in a rapidly falling exchange rate environment, the movement of short-term speculative capital becomes active, increasing intraday volatility, and the combination of hedging demand and derivative position adjustments can amplify overall market uncertainty.

A more fundamental problem is that market interpretations differ depending on what causes the exchange rate to fall. If the exchange rate naturally declines due to a combination of receding expectations for a US interest rate cut, a weaker dollar, a continued surplus in Korea's current account, and a full-scale re-entry of foreign capital, this could be seen as a signal reflecting the relative strength of the Korean economy. In this case, the stock market has room to resume a stable upward trend after a short-term correction. On the other hand, if the exchange rate plummets due to artificial intervention by authorities or a temporary supply-demand imbalance, the market will view this as an unsustainable movement and be wary. In particular, the 1350 won level is close to a psychological resistance line formed during the high exchange rate regime of recent years, so as it approaches this level, there is a high possibility that downward adjustments in export companies' earnings guidance, readjustment of foreign investors' positions, and changes in domestic institutions' currency hedging strategies will complexly interact, increasing volatility.

Changes in the structure of capital inflows and outflows are also important variables. In recent years, as domestic investors' overseas stock and bond investments have structurally expanded, the tendency for the won to weaken has become entrenched. Even if the exchange rate falls, if overseas investment demand does not easily decline, the downside may be limited. Conversely, if the won strengthens significantly, the relative attractiveness of domestic assets increases, which could lead to foreign capital returning to the country. In this process, there is a possibility that a feedback loop will form where the stock market and the foreign exchange market either reinforce or weaken each other. If foreign investors flow in without currency hedging, the upward pressure on the won will further increase, which in turn puts a burden on the earnings outlook of export companies.

Ultimately, a scenario where the exchange rate falls to 1,350 won offers clear benefits to the Korean economy, such as easing inflation and reducing import costs. However, it also exposes the structural vulnerabilities of its export-driven growth model and its semiconductor-heavy stock market. The core of the volatility lies in the speed and drivers of the exchange rate decline. A gradual, fundamentally-driven decline could enhance overall economic stability and attract foreign capital inflows. Still, a rapid decline would entail significant pain, impacting export companies' performance and leading to a substantial restructuring of the stock market. As the experience of the first half of 2026 showed, when stock prices and exchange rates moved in opposite directions, the exchange rate in the Korean financial market has now become a key variable that dictates capital flows and investment sentiment, beyond just an indicator of external competitiveness. The 1,350 won level is likely to be a testbed for this turning point. Market participants must calmly distinguish whether the exchange rate decline reflects a structural improvement in the real economy or an over-adjustment due to temporary supply and demand. The outcome of this distinction will be a crucial criterion in determining the future direction and volatility level of the KOSPI.