The South Korean currency fell to the lowest level against the U.S. dollar in 18 months on Monday as strong U.S. job data in March spurred demand for the greenback, while Norwegian sovereign wealth fund’s plan to cut emerging market bond holdings dampened appetite for the Korean won.

The Korean won closed at 1,144.70 won against the U.S. dollar on Monday, losing 8.10 won from Friday’s close at 1,136.6 won. This was the lowest closing since Sept. 29, 2017 when it ended at 1,146.50, and the first time in five months that the local currency returned to the 1,140 won range against the dollar, triggering the selloff of the won.

After opening at 1,137.10 won on Monday, its slide accelerated as appetite for the U.S. dollar further picked up on the U.S.’s better-than-expected payroll growth in March, leading most major currencies to weaken against the greenback on eased concerns over the U.S. economy.

The demand for the U.S. dollar also surged as foreign investors who have received dividends from Korean companies transferred their cash payouts in dollars, market analysts said.

Samsung Futures also noted that investor sentiment for the Korean won was dented by the announcement of the Norwegian finance ministry on Friday that Norway’s sovereign wealth fund, the world’s top three pension funds, will streamline its $300 billion fixed-income portfolio by cutting emerging market bonds including Korean debts from the benchmark index. Because of fears that the selloff of won-denominated bonds would slash the Korean won’s value, investors preemptively dumped the local currency.

Some market analysts also noted that investors turned cautious about the Korean currency ahead of the release of the U.S. Department of the Treasury’s foreign exchange report later this month. The U.S. announces its report on exchange rate policies of its trading partner countries twice a year – April and October. Korea last year avoided being labeled as a currency manipulator after Washington kept Seoul on its watch list for foreign exchange interventions along with other trade majors China, Germany, India, Japan and Switzerland.

The market, however, sees very little chance for Korea to be named as a currency manipulator this year after the country has been putting effort to bolster transparency in the government’s foreign exchange policy by unveiling its foreign exchange intervention records. Its trade surplus with the U.S. also shrank recently.

By Chung Joo-won and Lee Eun-joo

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