South Korean won nears global financial crisis levels
The South Korean won reached a 17-year low against the U.S. dollar, nearing levels last seen during the global financial crisis, as foreign investors sell Korean stocks and Middle East war tensions persist. The won hit 1,561.5 per dollar overnight, with analysts citing foreign selling in the Kospi, stronger U.S. monetary policy expectations, and inflation pressures linked to the conflict.
The South Korean won weakened sharply against the U.S. dollar, reaching an intraday high of 1,561.5 won per dollar in overnight trading on Friday, the highest level since March 2009 during the global financial crisis. The Seoul foreign exchange market recorded the won briefly surpassing 1,560 earlier, with the day’s trading closing at 1,539.1 won per dollar. Foreign investors have been net sellers of Korean stocks for 20 consecutive trading days, with total sales this year approaching 120 trillion won (US $77 billion), increasing demand for dollars and pressuring the exchange rate. The U.S. labor market’s stronger-than-expected performance also bolstered the dollar, raising expectations of a hawkish Federal Reserve policy shift, as reflected in rising Treasury yields and the Wall Street Journal Dollar Index. The prolonged Middle East war has exacerbated volatility by driving demand for safe-haven assets, while South Korea’s May inflation hit 3.1%, the highest in over two years, largely due to higher petroleum prices. Bank of Korea Governor Hyun Song Shin stated last month that the central bank may need to raise interest rates to address exchange rate volatility, housing prices in Seoul, and household debt risks. The Korea Trade Insurance Corp. warned that continued foreign selling of Korean stocks and a hawkish U.S. monetary stance could sustain dollar strength. South Korea’s government held an emergency meeting to improve transparency in offshore non-deliverable forward derivative transactions, while authorities plan inspections to curb speculative activity exploiting won weakness. Deputy Prime Minister Koo Yun-cheol emphasized vigilance around market developments, particularly in the Middle East and U.S. price trends, pledging swift action if needed. The Bank of Korea and Financial Supervisory Service will monitor for disruptive trading behavior as volatility persists.
This content was automatically generated and/or translated by AI. It may contain inaccuracies. Please refer to the original sources for verification.