The won-dollar exchange rate surged to 1,450 won intraday, hitting a record high for the first time in seven transactions. A strong global dollar and large net selling by foreign investors weakened the won.

On the 5th in the Seoul foreign exchange market, the weekly transaction closing price of the won-dollar exchange rate (as of 3:30 p.m.) was 1,449.4 won, up 11.5 won from the previous trading day. Based on the weekly transaction closing price, it is a record high in about seven months since Apr. 11 (1,449.9 won).

In the afternoon on the 5th, a ticker in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul displays the won–dollar exchange rate and the KOSPI closing price. /Courtesy of News1

The rate opened at 1,443.5 won and climbed from early trading, quickly rising to just below 1,450 won. It fell to the 1,445-won level in the afternoon, but surged to 1,450 won just before the close. On an intraday high basis, it is also the highest since Apr. 11 (1,457.2 won).

Back-to-back net selling of stocks by foreign investors pushed the rate higher. In the KOSPI market, foreign investors net sold 2.52 trillion won worth. Following the previous day (2.23 trillion won), heavy selling continued. The KOSPI index fell to the 3,900 level intraday, triggering a sell-sidecar, but later pared losses and closed at 4,004.42, down 2.85% from the previous day.

A strong global dollar also fueled the won's weakness. The dollar index (DXY), which measures the dollar's value against the currencies of six major countries, was tallied at 100.2, topping 100 for the second straight day following the previous day. The strong dollar is attributed to ebbing expectations for a December rate cut by the Federal Reserve (Fed) and increased demand for safe assets amid concerns about a prolonged U.S. federal government shutdown.

Min Kyung-won, a Woori Bank researcher, said, "As risk assets enter a correction phase amid debates over tech stock valuation (overvaluation), the likelihood has increased that pressures will grow for weakness in the domestic stock market and in the won, a risk currency," and noted, "Chasing purchases by real-dollar buyers such as for import settlement and overseas investment will add to upward pressure on the exchange rate."

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