(LEAD) Korean won tumbles to fresh 17-yr low on foreign stock selloff

Lead

The South Korean won has weakened to its lowest level in 17 years against the U.S. dollar, as foreign investors continue to sell local equities and renewed Middle East tensions weigh on the currency. The won was quoted at 1,545.2 won per dollar at 3:30 p.m. on Monday, down 13.2 won from the previous session, marking the weakest level since March 9, 2009, according to Yonhap News Agency.

Coverage Comparison

Yonhap News Agency reported on the currency's slide across multiple dispatches, each highlighting different aspects. One report focused on the broader annual trend, noting that the won has fallen nearly 6 percent against the dollar this year and that foreign investors sold off more than 156 trillion won worth of domestic stocks. Another emphasized the immediate geopolitical trigger, citing fresh concerns of conflict between the United States and Iran. A third dispatch stressed the record low and the sharpness of the fall.

All three reports attribute the won's weakness to a combination of foreign investor selling of South Korean equities and global factors, including a strong U.S. dollar and Middle East tensions. The reports vary in their emphasis, with one focusing on the year-to-date statistics, another on the day's trading details, and a third on the record low itself.

Key Claims

According to Yonhap News Agency, the won has fallen nearly 6 percent against the U.S. dollar this year. The average exchange rate stood at 1,484.56 won per dollar during the first half of the year, the second-highest first-half average on record, behind 1,493.08 won in the first half of 1998 during the Asian financial crisis.

Foreign investors sold a net 156.56 trillion won worth of shares on the benchmark KOSPI market from the beginning of the year through July 3, more than five times the 34.58 trillion won recorded during all of 2008, the year of the global financial crisis.

The exchange rate climbed above the 1,500-won level in March for the first time since the global financial crisis, following the outbreak of conflict in the Middle East. Although it briefly retreated to the low 1,400-won range, it rebounded above 1,500 won in mid-May and has remained above this level ever since, according to Yonhap.

On Monday, the won opened at 1,536.5 won per dollar, down 4.5 won from the previous session, after reports that the U.S. and Iran traded strikes since an Iranian projectile hit a cargo ship in the Strait of Hormuz. At one point during morning trading, the won fell to as low as 1,539.7 won per dollar, but recouped some losses amid reports that Washington and Tehran would renew talks.

Foreign investors sold a net 7.7 trillion won (US$4.9 billion) worth of local stocks on Monday, marking the seventh consecutive trading session of net selling. At one point in the morning, foreign investors had sold a net 1.3 trillion won worth of local stocks.

Among Group of 20 currencies, only the Turkish lira (-8.23 percent) and the Indonesian rupiah (-6.56 percent) posted larger declines than the won's 5.92 percent depreciation as of July 3, according to Yonhap Infomax, the financial arm of Yonhap News Agency.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.2 percent to close at 8,394.65 on Monday, after slumping more than two percent to 8,253.86 points earlier in the morning.