Last month, the net inflow of foreign securities investment funds into the domestic market plunged to one-fourth of the previous month's level. It was the result of short-term bond selling led by public funds and profit-taking by foreign investors following a rise in domestic stock prices.
According to the "Trends in international finance and foreign exchange markets since Oct. 2025," which the Bank of Korea released on the 13th, foreign investors posted a net inflow of $2.29 billion in domestic securities investment funds last month. It was a net inflow for the second consecutive month, but the size shrank to one-fourth of the previous month's $9.12 billion.
Among securities investment funds, the shift of bond funds to a net outflow of $720 million had a large impact. After a net outflow of $770 million in August, bond funds turned to a net inflow of $4.78 billion in September, but plunged within a month and returned to a net outflow. The Bank of Korea (BOK) said this was "due to continued selling of short-term bonds led by public funds."
Equity funds also saw their net inflow narrow. Foreign equity funds maintained a net inflow for six straight months through last month, but the size of the net inflow decreased from $4.34 billion in September to $3.02 billion in October. The Bank of Korea (BOK) analyzed that "the inflow narrowed due to factors such as profit-taking by foreigners following the rise in domestic stock prices."
Meanwhile, the average daily trading range and day-over-day volatility of the won-dollar exchange rate last month were 5.6 won and 0.39%, respectively, widening from the previous month (3.9 won and 0.28%, respectively). The Bank of Korea (BOK) said, "With dollar strength following a hawkish Federal Open Market Committee (FOMC) outcome and continued overseas securities investment by residents, the exchange rate rose considerably."