(LEAD) S. Korea's currency hits over 2-month low on renewed tension in Middle East

Lead

The South Korean won tumbled to its lowest level since 2009 against the U.S. dollar on Friday, as foreign investors continued to sell local stocks and hopes for a diplomatic solution to the Middle East war faded, according to Yonhap News Agency. The currency was quoted at 1,539.1 won per dollar at 3:30 p.m., down 9.4 won from the previous session, marking the weakest level since March 9, 2009. At one point during trading, the won weakened to 1,549.1 won per dollar, the weakest intraday level since March 10, 2009.

Coverage Comparison

Yonhap reported multiple trading sessions over recent weeks, each reflecting ongoing pressure on the Korean currency. On Thursday, June 4, the won opened at 1,530.8 won per dollar, down 13.6 won from the previous session's close, amid renewed tensions in the Middle East as the United States and Iran engaged in a fresh round of airstrikes. The won later recouped some losses after Finance Minister Koo Yun-cheol warned that authorities would take action to address excessive volatility in the foreign exchange market, and also pledged measures to respond to volatility in the bond market.

By Friday, June 5, the won opened at 1,529 won per dollar, up 0.7 won from the previous close, but quickly lost ground as foreign investors offloaded local shares. Yonhap reported that as of Friday morning, foreign investors had sold a net 1.4 trillion won (US$900 billion) worth of local stocks, with the figure rising to 3.5 trillion won (US$2.3 billion) by the afternoon. Foreign investors remained net sellers for the 20th consecutive trading session.

On the same Friday, the benchmark Korea Composite Stock Price Index (KOSPI) plunged 4.55 percent to 8,246.1 as of 10:44 a.m., according to Yonhap. A separate Yonhap report noted that the index closed down 5.54 percent at 8,160.59. The earlier report on Thursday indicated the KOSPI dropped 1.84 percent to 8,639.41 on heavy selling by foreign investors, who sold a net 6.9 trillion won (US$4.5 billion) worth of stocks that day.

In a separate session on May 22, Yonhap reported the won weakened to 1,517.2 won per dollar at 3:30 p.m., down 11.1 won, as oil prices climbed over renewed uncertainties surrounding the peace deal between the United States and Iran. The won opened at 1,504.7 won, up 1.4 won, but pared gains as higher crude prices fueled inflation worries. Yonhap noted that global oil prices rose as a peace deal between warring parties remained elusive, and that reports indicated Iran was averse to giving up its near-weapons-grade enriched uranium despite Washington's insistence that such materials be brought out of the country.

On May 15, Yonhap reported the won weakened to a more than one-month low, opening at 1,494.2 won per dollar, down 3.2 won, and later falling to 1,500.8 won at 3:30 p.m., a 9.8 won drop. That session was the first time since April 7 that the won broke below the psychologically important 1,500 level, attributed to higher-than-expected U.S. inflation data and renewed concerns over the U.S.-Iran war that raised global oil prices. The KOSPI briefly surged past 8,000 points that day but then plunged more than 6 percent as foreign investors sold a net 4.6 trillion won (US$3.1 billion) worth of stocks.

Key Claims

• The won hit its lowest level since 2009 on Friday, June 5, quoted at 1,539.1 won per dollar at 3:30 p.m., down 9.4 won from the previous session (Yonhap).
• The won opened at 1,529 won per dollar on Friday, up 0.7 won, before losing ground as foreign investors sold local stocks (Yonhap).
• Foreign investors sold a net 1.4 trillion won (US$900 billion) worth of local stocks on Friday morning, rising to 3.5 trillion won (US$2.3 billion) by afternoon (Yonhap).
• The KOSPI plunged 4.55 percent to 8,246.1 as of 10:44 a.m. on Friday (Yonhap); a separate report said it closed down 5.54 percent at 8,160.59.
• Finance Minister Koo Yun-cheol warned that authorities would take action to address excessive volatility in the foreign exchange market (Yonhap).
• On May 22, the won weakened to 1,517.2 won per dollar at 3:30 p.m., down 11.1 won, as oil prices rose over uncertainties in the U.S.-Iran peace deal (Yonhap).
• On May 15, the won opened at 1,494.2 won per dollar, down 3.2 won, and later fell to 1,500.8 won, a more-than-one-month low (Yonhap).

Perspectives

Finance Minister Koo Yun-cheol expressed official concern over the currency's decline, warning that authorities would take actions to address excessive volatility in the foreign exchange market. He also pledged measures to respond to excessive volatility in the bond market, according to the finance ministry. This indicates a governmental stance aimed at stabilizing markets amid ongoing depreciation pressures.

Analyst Moon Jeong-hee of KB Kookmin Bank attributed the won's weakness to strong demand for U.S. dollars as foreign investors continued to sell off local stock holdings, pointing to market-driven factors rather than direct policy intervention.