Chip-export dollars push the won price of 100 yen to its lowest since 2008

The Japanese yen fell to its weakest level in about 18 years ahead of Korea's Hangeul Day holiday; the won-yen rate held in the mid-800 won range per 100 yen on the 8th.

The monthly average won-yen rate declined from 950.38 won per 100 yen in June to the 920 won range in July and the 880 won range in August.

According to Hana Bank, the won-yen rate fell as low as 844.16 won per 100 yen in intraday trading Wednesday, its lowest level since January 2008, when it stood at 837.58 won.

Stephen Chiu, chief emerging markets foreign exchange strategist at Bloomberg Intelligence, said the won's rally has slowed recently but the currency has remained resilient around 1,340 per dollar.

HSBC said more of Korea's surplus gains are being recycled into the domestic economy through investment, bonuses, shareholder returns and taxes, prompting foreign exchange conversion and further supporting the won.

At June's average rate, exchanging 100,000 yen required about 950,000 won; at 845 won per 100 yen the same amount costs about 845,000 won, a saving of more than 100,000 won.

The yen is not traded directly in Seoul's foreign exchange market; banks calculate the won-yen rate indirectly using each currency's exchange rate against the U.S. dollar.

The yen has struggled to gain ground despite the Bank of Japan's interest rate hike last month.

The yen weakened to nearly 164 per dollar in late July, prompting an unusual coordinated intervention by U.S. and Japanese authorities that briefly pushed the rate back to around 156 yen per dollar; the effect proved short-lived.

Joey Chew, head of Asia FX research at HSBC, said export growth is "still quite narrow-based" and that "the risk for the Korean won is that the AI boom suddenly ends."

Stephen Chiu said the divergence between the won and yen is likely to persist through the end of the year, a period when Korean exports and the won tend to perform well.

The won and yen have moved in sharply different directions since July, a rare divergence between two currencies whose movements have historically reflected "significant overlap in the two countries' export structures," according to Ashok Bhundia, deputy chief economist at the Institute of International Finance.

After the intervention's short-lived effect, the yen returned to the 157-160 yen-per-dollar range.

Three typhoons, Choi-wan, Nolo and Koguma, are active in the northwestern Pacific during the holiday stretch beginning with Hangeul Day on the 9th; based on projected paths they are unlikely to directly affect the Korean Peninsula and no direct landfall on the Japanese mainland is currently expected.

The 70% probability radius for Typhoon Koguma's forecast position on the 13th extends 440 kilometers, leaving open the possibility that its course could shift.

The won price of a dollar fell about 12.7% from end-June to end-September.

The won price of 100 yen fell about 11.2% from June's average to Wednesday's intraday low.

Implied yen-per-dollar rate at Wednesday's cross is roughly 159 (158.7).

Wednesday's low sits 6.58 won, or about 0.78%, above the January 2008 level.

Because the cross fell less than the won-dollar rate, the yen roughly held against the dollar over the period, firming about 1.7% (approximate, mixed bases).

With the yen at about 158.7 per dollar, a won at 1,424 per dollar would put 100 yen at about 897 won.

At 1,340 won per dollar and 164 yen per dollar, 100 yen would cost about 817 won.

Changing 100,000 yen costs about 105,000 won less at 845 won per 100 yen than at June's average, an 11% cut.