Bank of Korea's Exchange Rate Intervention: Focus on 1,445 Won and 1,491 Won

This major internal information is behind the new high, surpassing the $231 position establishment price.

At that time, the stock reached $233.21 during trading, showing less than a 1% error margin from the $231 position establishment price, suggesting a significant, internal-information-level issue occurred at the position establishment price.

CEO Kim Jun-young explained that the September 28 stock buyback announcement was an enormous scale of $150 billion.

Korean retail investors hold approximately $200 billion in US stocks, meaning a 1% change in the exchange rate results in a 2.7 trillion won difference in valuation. The foreign exchange authorities' sale of $22.4 billion in Q4 last year to defend the exchange rate also shows this indicator's sensitivity to external variables like interest rates or wars.

With Korean retail investors holding approximately $200 billion in US stocks, even a 1% change in the exchange rate creates about a 2.7 trillion won difference in valuation, significantly impacting individual investors.

Foreign exchange authorities intervened on an unprecedented scale to defend the exchange rate in Q4 last year, selling $22.4 billion.

By recognizing that positions create issues, rather than issues creating positions, novice investors can avoid the common mistake of hastily buying based solely on issues and failing.

Conversely, during periods of exchange rate depreciation, verbal intervention by authorities and an increase in the National Pension Service's hedge ratio to 15% were key variables.

Conversely, during periods of exchange rate depreciation, verbal intervention by foreign exchange authorities, a US-Iran truce, and an upward adjustment of the National Pension Service's hedge ratio to 15% had an impact.

The National Pension Service plays a role in selecting specific price levels for the exchange rate, rather than driving its overall direction.

Currently, based on 1,358 won, investors who bought dollars one or three months ago have incurred losses, while sellers have made profits.

Exchange rate advocates who have incurred losses are likely to generate additional issues or take action to recover their losses, while adversaries who have profited tend to protect their current gains.

Foreign selling also impacts the exchange rate; 134 trillion won in KOSPI was sold over five months, with 77% concentrated in Samsung Electronics and SK Hynix, creating demand for currency conversion.

Based on the current exchange rate of 1,358 won, calculating the risk-reward ratio indicates a high probability of profit, making it a useful investment indicator.

Based on the current exchange rate of 1,358 won, calculating the risk-reward ratio shows a favorable profit potential, which can be used as a baseline for investment decisions.

There is a history of intervention in the 1,430 won range on October 13 last year, the first in a year and a half, and verbal intervention on December 24 when it reached 1,483 won, leading to a depreciation of the exchange rate.

The initial price of 1,445 won was derived by comprehensively calculating various factors such as verbal intervention timing, Christmas intervention line, and half-retracement of the decline.

The current exchange rate reflects half of the decline between the July high of 1,555 won and the September low of 1,336 won.

If the exchange rate reaches 1,445 won or 1,491 won, exchange rate gains will occur based on $1,000, leading to an increase in the valuation of overseas stocks held by Korean retail investors.

However, a sudden rise in the exchange rate pushes up import prices, increasing inflationary pressure, which in turn leads to interest rate hike pressure and raises the possibility of a slowdown in real estate price increases.

An exchange rate of 1,445 won is a point where foreign exchange authorities are highly likely to intervene verbally, with past gradual responses confirmed, such as warnings against excessive weakness in the 1,480 won range.

Conversely, 1,491 won is judged as a point where actual foreign exchange market intervention, beyond verbal intervention, such as swaps, is likely to occur.