Concerns Mount Over Earnings Shock, Escalating North Korea Risks
The won-dollar exchange rate has been on the rise, leading to an influx of foreign selling. The KOSPI index experienced volatility as foreign investors unloaded their holdings, causing it to fall below the 2440 level from the previous day.
On the morning of Jan. 18, the KOSPI is indicating a modest rebound, up by 6.43 points, or 0.26%, to 2,442.38 points compared to the previous day. Despite a sharp decline of over 2% the day before, it appears to be stabilizing within the neutral range. On the same day, the won-dollar exchange rate started at 1,345.0 won, showing a slight increase from the previous day.
The won-dollar exchange rate concluded trading the previous day at 1,344.20 won. The exchange rate opened at 1,338.00 won and experienced an intraday rise, reaching as high as 1,346.70 won.
The value of the Korean won against the U.S. dollar has shown a downward trend for most of this month, with the exception of two days, Jan. 9 and Jan. 11. Amid the persistent weakness of the won, the won-dollar exchange rate, which was at 1,288.00 won, has surged by a total of 56.2 won, or 4.36%, until the previous day. This marks the first time the exchange rate has passed the 1,340 won mark since Nov. 2 when it reached 1,342.90 won.
As the Korean won exhibited weakness, foreign investors, who are concerned about exchange rate losses, have exited the domestic stock market. On the previous day, foreigners sold a total of 1.03 trillion won, equivalent to 12,449 contracts, in the futures market and 1.08 trillion won in the spot market.
The outflow of foreign funds has shaken the domestic stock market. The previous day, the KOSPI concluded trading at 2,435.90 points, down by 61.69 points, or 2.47%, while the KOSDAQ closed at 833.05 points, marking a decrease of 2.55%.
Lee Kyung-min, a researcher at Daishin Securities, said, “The KOSPI recorded a decline of over 2% due to the net selling trend of foreign investors in both the spot and futures markets. All the gains from last December have completely retracted, and it is the weakest situation since December 2022.”
Experts are forecasting the peak of the won-dollar exchange rate to be around 1,350 won, and they also assess that the probability of a quick reversal in the strong dollar trend is minimal in the short term.