Dollar Strength Sends Canadian Dollar Tumbling; Won-Dollar Exchange Rate Holds Steady in 1,380 Range — BigGo Finance

Dollar strength triggered by the collapse of U.S.-Canada trade negotiations is keeping the won-dollar exchange rate pinned in the 1,380 won range. However, with month-end dollar selling by South Korean exporters limiting the upside, the currency pair is expected to continue trading sideways without clear direction.

According to Seoul Money Brokerage Services, the one-month won-dollar contract traded overnight in the New York NDF market was last quoted at ₩1,383.1. Taking into account the recent one-month swap point (-₩0.15), the exchange rate is expected to open at a level ₩0.85 higher than the previous session’s close of ₩1,382.4.

At the center of the upward pressure is U.S. tariff policy. The United States has imposed 50% tariffs on approximately $20 billion (about 27.6 trillion won) worth of Canadian goods, including agricultural products, furniture, and cement. Unlike previous measures, some items that meet USMCA requirements are also included in this round of tariffs, leading to assessments that the agreement’s exemption effect has been significantly weakened.

Canada immediately pushed back. Prime Minister Mark Carney told reporters, “When you’re attacked, you’re at war,” adding, “We have been attacked.” The Canadian government plans to implement retaliatory tariffs targeting U.S. steel, dairy products, home appliances, agricultural machinery, pulp and paper, and electronics starting on the 8th of next month.

U.S. President Donald Trump went a step further. He posted on his social media platform Truth Social that “Canada will no longer be treated like a state,” announcing that tariffs on Canadian automobiles, auto parts, and steel would be raised to 50% starting January 1 next year.

This tariff premium is fueling dollar strength. The Dollar Index rose slightly to 98.98, while the Canadian dollar traded down about 0.4% against the U.S. dollar at 1.385 Canadian dollars per dollar. The Canadian dollar had hit its highest level in more than two months last week before sharply reversing course.

City Index analysts noted that the daily RSI for USD/CAD entered oversold territory for the first time since January before rebounding, analyzing that this recovery is more technical short-covering than a genuine fundamental reassessment.

Canada’s economic fundamentals are not bad. Second-quarter GDP grew at an annualized rate of 3.4%, and July employment increased by 75,000. Rising international oil prices are also a favorable factor for Canada as an oil exporter. However, Karl Schamotta of Corpay Cross-Border Solutions noted that the U.S. Treasury Department’s Treasury buyback announcement had been the “overwhelming driver” of Canadian dollar strength through the middle of last week, and that tariff risk is now reversing those gains.

In the Korean won market, month-end negotiation is acting as a key variable capping the exchange rate’s upside. With exporters selling dollars ahead of month-end settlements, additional dollar supply is expected to enter the market in preparation for the corporate tax interim payment deadline scheduled for next Monday.

The overnight decline in New York stocks, led by AI semiconductor shares, could weigh on the South Korean stock market. If foreign net selling expands, there is room for increased downward pressure on the won. However, with intervention caution surrounding the yen persisting, some observers note that if verbal intervention from Japanese authorities or reports related to yen defense emerge, the won could strengthen in tandem with the yen.