SEOUL, November 10 (AJP) - The U.S. dollar has retreated below 1,460 won as the Korean currency benefited from the global softening in the greenback and renewed foreign stock buying.
The dollar fell 6.70 won to 1,453.30 in Seoul Monday morning after shooting up to 1,461.5 last Friday - the highest since 1,472 on April 9 amid presidential impeachment and U.S. President Donald Trump's tariff barrage.
Foreign investors sold 7.26 trillion won ($5.4 billion) in Korean stocks over the five sessions last week - the largest weekly record. The heavy selling sent the won down 2 percent - the steepest among core currencies - with selling primarily targeting the two chip majors for their association with questions about bubbles around AI boom.
The won has been one of the weakest even as the KOSPI has been performing strongest among key market and country has been keeping up record trade surplus thanks to red-hot chip exports - further exposing the Korean economy's vulnerabilities from over-dependence on chipmaking.
The unfazed demand for the U.S. dollar also points to won's structural fragility.
From January to September, South Koreans bought $99.85 billion overseas securities - mostly on the Wall Street -, more than tripling the $29.65 billion foreign purchase of Korean securities during the period. Companies have been holding export earnings in greenback amid continued volatility in external trade environment and pressure over Korea's $20 billion annual commitment of investment in the U.S. under a bilateral trade deal.
Any foreseeable upside in the Korean won is unlikely, analysts agree.
"With expectations of U.S. rate cuts diminishing and strong -dollar environment firmly in place on top of heavy foreign stock sales, the won faces persistent downward pressure," said Moon Da-un, a researcher at Korea Investment & Securities.
Lee Jin-kyung, an economist at Shinhan Investment Corp., forecast the dollar-won exchange rate to go as high as 1,500 won in the first half of next year, given "structurally overwhelming outflows versus dollar inflows."
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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