A notice show $100 bills are unavailable at a Hana Bank branch in Seoul, Wednesday. X capture
A bank branch reported that $100 bills had sold out, with some investors buying them on expectations of a reversal in the recent sharp appreciation of the Korean won against the U.S. dollar, market watchers said Friday.
Some say the incident is indicative of lingering skepticism over whether the foreign exchange (FX) authorities can stabilize the currency.
It comes amid a lack of measures to fundamentally tackle structural issues dragging down the value of the Korean currency in the context of the receding power of the global reserve currency.
According to a Hana Bank branch in Gangnam, southern Seoul, it ran out of $100 bills late Wednesday. The news made headlines after it posted a notice informing customers that U.S. currency was unavailable.
The lender said the shortage was due to timing issues, adding that requests for additional dollar bills from headquarters had not been made in time.
However, the episode fanned expectations among retail investors that strong demand for dollars would continue, with many of them seeking to buy the U.S. currency during what they consider a short-lived gain in the Korean won.
The dollar demand surge also reflects growing interest in overseas investment among retail investors.
A stronger won lowers the cost of buying foreign assets, encouraging many to increase holdings of overseas stocks and funds before the won weakens again.
On Wednesday, the Korean currency strengthened sharply to the 1,440 won range against the dollar from the previous low range of 1,480 won, following a verbal intervention by the Ministry of Economy and Finance and Bank of Korea.
The won closed at 1,440.3 won as of 3:30 p.m., Friday, gaining 9.5 won from the previous session. It hit an intraday high of 1,429.5 won.