Foreign Investors Keep Selling Korean Stocks
Driven by Stronger Dollar and Weaker Yen
On the 6th, the won-dollar exchange rate started trading back up near the 1,470-won level for the first time in about two weeks. This was the result of a stronger dollar driven by growing risk-off sentiment toward global risk assets, after the New York stock market fell on concerns about an AI bubble.
On the 5th, an employee is monitoring the stock market and exchange rates in the dealing room at Hana Bank's head office in Jung-gu, Seoul. Photo by Jo Yongjun
In the Seoul foreign exchange market that day, the won-dollar exchange rate opened at 1,472.7 won, up 3.7 won from the previous trading day, and as of 10:00 a.m. it was fluctuating in the low 1,470-won range. It is the first time since January 21, when it opened at 1,480.4 won, that the rate has opened above the 1,470-won level.
This upward trend was driven by a stronger dollar as the New York stock market fell overnight on controversy over concerns about AI profitability, and Bitcoin plunged, reinforcing global risk-off sentiment.
In New York, the Dow Jones Industrial Average fell 1.2%, the Standard & Poor's (S&P) 500 Index dropped 1.23%, and the Nasdaq Composite Index declined 1.59%, with all three major indices moving lower together. Bitcoin also plunged 14% in a single day, coming in at 62,807 dollars as of 9:00 a.m. on the 6th, putting it on the verge of breaking below the 60,000-dollar level.
The dollar, by contrast, has remained relatively strong. The Dollar Index (DXY), which measures the value of the greenback against the currencies of six major countries, stood at 97.948, up 0.02% from the previous day, putting it on the verge of reclaiming the 98 level. The fact that foreign investors recorded net selling of more than 5 trillion won in the KOSPI market the previous day, and then went on to post additional net selling of about 200 billion won in early trading on the 6th, also contributed to the weakness of the won.
The Japanese yen, which tends to move in tandem with the won, is also continuing a relatively weak trend. The yen-dollar exchange rate was tallied at 156.628 yen, down 0.408 yen from the previous day.
Min Kyungwon, a researcher at Woori Bank, said, "As global selling of risk assets continues, foreign investors are persistently recording net selling in the domestic stock market," adding, "This trend is amplifying downward pressure on the won, which is classified as a risk currency."
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