Seoul: The South Korean won fell further against the U.S. dollar on Thursday, reaching another seven-month low and approaching the lowest level of the year, influenced by foreign investors' heavy stock selling and a weaker Japanese yen. The won was quoted at 1,467.7 per dollar at 3:30 p.m., down 2.0 won from the previous session. It marked the weakest level since April 9, when it ended at 1,484.1 won, the lowest level of the year.
According to Yonhap News Agency, the April 9 figure also marked the lowest level since March 12, 2009, when the won closed at 1,496.5 per dollar amid the global financial crisis. The local currency slipped below the psychologically significant 1,450-won threshold last week for the first time since April and has been on a constant decline since Tuesday amid heavy foreign selling of Korean shares following recent sharp gains.
The won's weakness occurred amid the global strengthening of the dollar, supported by easing uncertainties in the U.S. economy, as well as expectations of economic stimulus in Japan, which further weakened the yen. Moon Jung-hee, an economist at KB Kookmin Bank, stated that the won faces downward pressure as the U.S. dollar continues to strengthen in offshore markets and the local currency moves in sync with the weakening Japanese yen.
Experts also pointed to rising investments by local investors in U.S. stocks. Given the recent foreign exchange trends, exporters have been holding onto U.S. dollars, rather than selling them immediately. Moon added that the growth of overseas investment would indicate sluggish domestic investment, potentially undermining household purchasing power and dampening corporate investment sentiment.
Bank of Korea (BOK) Governor Rhee Chang-yong said in an interview Wednesday that authorities are willing to intervene in case of excess volatility, while noting that he believed the market is "excessively sensitive" to global uncertainties. Rhee emphasized that South Korea's foreign currency debt level and the overall market conditions remain stable.