(July 1): South Korea’s won slid towards its weakest level since the global financial crisis, leading a retreat in Asian currencies, as the dollar strengthened and overseas investors sold local equities.
The won declined as much as 0.6% to 1,559.10 per dollar after depreciating to 1,562.20 last month, a level last seen in March 2009. Overseas investors sold a net 1.46 trillion won (US$938 million or $1.2 billion) of stocks in the Kospi index on Wednesday, set for an eighth straight day of outflows.
“The dollar’s strength is such that a fresh low for the won would not be surprising,” said Moon Dawoon, an economist at Korea Investment & Securities Co in Seoul. “If it does break through, it will be difficult to identify the next technical level, so from a qualitative perspective, the downside for the won should be kept open to around 1,600 per dollar.”
The Kospi dropped as much as 3.9% with Samsung Electronics Co and SK Hynix Inc both losing at least 3%. Wednesday’s foreign outflows follow a record US$58 billion ($75.17 billion) in selling from the broader market last quarter, driven by global funds hitting exposure limits to Samsung and SK Hynix, alongside shifting sentiment towards the artificial intelligence trade.
The Indonesian rupiah, Philippine peso and Thai baht also declined. The yen weakened 0.1% to 162.70 per dollar after sliding past the 162 level this week to its weakest since 1986. The Bloomberg Dollar Spot Index gained 0.2%.
See also: Morgan Stanley among banks challenging growing dollar optimism
Uploaded by Chng Shear Lane
