According to the Kyunghyang on Oct. 10, the won-yen cross rate fell to the 840s per 100 yen this week, the lowest in 18 years since 2008. At 846 on Oct. 8, 100,000 won buys about 11,820 yen, 18.2 percent more than when the rate was 1,000 won per 100 yen.

The paper also gave an example: a Celine bag priced at 2.7 million won in Korea would cost about 2.28 million won if its Japan price is 270,000 yen, 420,000 won cheaper. The won-euro rate has fallen from the 1,800s to the 1,400s.

The won-dollar rate was 1,342.8 on Oct. 9, about 14 percent below the weekly-close high of 1,555.8 on July 2. The won strengthened even as the dollar index topped 102, its highest this year.

Chip boom and exporters selling dollars

Analysts first cited the large dollar supply from semiconductor exports. Moon Da-eun of Korea Investment & Securities said the surging current-account surplus is putting downward pressure on the exchange rate. Major exporters began selling dollars in July, partly encouraged by the government.

Foreign flows also changed. In the first half, foreign stock selling kept the rate from falling, but selling eased in the second half and funds from SK hynix's US depositary receipt (ADR) issuance came in. Ha Geon-hyeong of Shinhan Investment said relatively sound public finances also support the won, contrasting France, where government bond yields jumped as its austerity budget faced collapse and the euro weakened. The government projects next year's debt ratio at 48.3 percent, below this year's original-budget 51.6 percent.

Outlook and risks

The market expects the chip boom to last into next year and the won's strength not to fade soon. If US rate-hike expectations recede and the dollar weakens, the rate could fall further. Conversely, if the boom ends and dollar inflows shrink while foreign outflows and retail overseas investing rise, the rate could climb again. Lee Min-hyuk, an economist at KB Kookmin Bank, said low birth rates, aging and slowing productivity could create structural upward pressure.