Tailwind From Record KOSPI High... Won-Dollar Rate Falls Back to 1,440 Range After Seven Sessions

Foreign Investors Log Net Purchases of 3 Trillion Won in KOSPI
Strength of Yuan and Yen Also Impacts the Won

On the 12th, as the KOSPI broke through the 5,400 and 5,500 levels intraday for the first time in history, the won-dollar exchange rate fell to the 1,440-won range for the first time in seven trading days.

On the Seoul foreign exchange market that day, the won-dollar exchange rate closed at 1,440.2 won as of 3:30 p.m., down 9.9 won from the previous trading day.

Foreign investors' buying of KOSPI shares is cited as a major factor behind the decline in the exchange rate. As foreign investors bought domestic stocks, demand for the won increased, which in turn affected the won-dollar rate. After breaking through the 5,400 level immediately after the opening, the KOSPI surpassed the 5,500 level in the morning session. In particular, foreign investors recorded a net purchase of shares worth about 3 trillion won on the KOSPI market that day.

The strength of the Chinese yuan and the Japanese yen also appears to have contributed to the decline in the won-dollar exchange rate. The yuan-dollar exchange rate has continued its downward trend for four consecutive trading days and is staying in the 6.90-yuan range.

Remarks by a Japanese government official intended to encourage a stronger yen also appear to have affected the won, which has been moving in tandem with the yen-dollar exchange rate.

Atsushi Mimura, Vice Minister of Finance for International Affairs in charge of Japan's currency policy, told reporters that day, "We will continue to closely monitor the markets and maintain close communication with market participants. We have not relaxed our vigilance at all."

Yonhap News Agency