A rally in semiconductor stocks, coupled with sustained foreign buying in Korea's benchmark equity index, propelled the Korean won to its strongest point in nearly two years on Monday.

The currency climbed as much as 1.3% to 1,334.70 against the U.S. dollar, marking its highest level since October 2024. Its relative strength index, a gauge of momentum, touched its most elevated reading since 2013, highlighting the pace of the won's appreciation.

Exchange data showed Monday's advance in the Seoul stock market was spearheaded by chip titans Samsung Electronics and SK Hynix. Offshore investors snapped up more than 800 billion won (around $598 million) worth of Kospi-listed shares, extending their net buying streak to a third consecutive session.

Persistent demand for Korean assets could lend further support to the won, though maintaining the current pace of appreciation may prove increasingly challenging. The currency has strengthened roughly 6% so far this year, and the rally is appearing increasingly stretched, which could prompt domestic asset managers to unwind some of their offshore hedging positions or encourage retail investors to resume buying foreign equities, according to a note from Geoffrey Yu, senior strategist at BNY Mellon.