As the won-dollar exchange rate approached 1,480 won per U.S. dollar, the net buying of U.S. stocks by domestic investors investing in overseas equities plunged within a week.
According to Korea Securities Depository (KSD) on the 16th, the net purchases of U.S. stocks settled by domestic investors from the 6th to the 12th totaled about $228.28 million (about 337.3 billion won).
This was down 77.4% from a week earlier, when net purchases reached $1,007.86 million (about 1.4893 trillion won). Compared with two weeks earlier, $1,369.96 million (about 2.0244 trillion won), the decline is even more pronounced.
Although the net buying trend remains intact, buying strength has weakened sharply. Experts said individuals are scaling back their U.S. stock investments as the recent rise in exchange rates increases the burden of exchanging currency.
In fact, over the same period in the Seoul foreign exchange market, the won-dollar rate rose 4.9 won from 1,468.8 won to 1,473.7 won on a weekly closing basis. In particular, on the 13th it surged to 1,477 won in after-hours trading, coming close to breaking 1,480 won.
As exchange-rate volatility widened, the government held an emergency foreign exchange market check meeting on Sunday the 14th. Convening a meeting despite it not being a regular business day is interpreted as a judgment that the situation in the foreign exchange market is that serious. However, there was no specific announcement on the outcome of the meeting.
KB Kookmin Bank economists Mun Jeong-hui and Lee Min-hyeok said, "Last week, concerns about overvaluation of artificial intelligence (AI) resurfaced, and with an onshore supply-demand imbalance favoring dollar demand adding to the mix, the exchange rate again closed in the 1,470-won range."
They added that this week, with the release of U.S. employment indicators and monetary policy announcements from the European Central Bank (ECB) and the Bank of Japan (BOJ) scheduled, exchange-rate volatility is likely to be high.
They said, "If weak U.S. employment coincides with a hawkish stance from the ECB and BOJ, the dollar could turn weaker, and the won-dollar rate could head lower," presenting a projected range of 1,440 to 1,480 won for this week.
Park Sang-hyeon, a researcher at iM Securities, also analyzed, "Although the outcome of the U.S. Federal Open Market Committee (FOMC) meeting was more dovish (favoring monetary easing) than expected, the won-dollar rate instead strengthened, leaving concerns about won weakness intact."
Park forecast this week's exchange-rate range at 1,450 to 1,490 won and cited whether foreign exchange authorities intervene in the market as a key variable.