The won-dollar exchange rate closed at 1,439.5 won on the 30th. It rose 13.2 won from the previous day. The move is seen as driven by growing risk-off sentiment after the U.S. New York stock market plunged, led by technology stocks.
The Nasdaq index fell 2.6% intraday on the 29th (local time). As the artificial intelligence (AI) bubble theory spread, Microsoft dropped more than 10%. Microsoft said it increased capital expenditures ($37.5 billion) on AI infrastructure and the like by 66% in a year, but results fell short of that.
Min Kyung-won of Woori Bank said, "As concerns about AI overinvestment resurfaced, risk aversion in the market grew." Because the won is classified as a risk asset compared with the dollar, when risk aversion increases, the won-dollar exchange rate rises.
Also that day, foreign investors' net selling of nearly 2 trillion won in domestic stocks became a factor pushing up the won-dollar exchange rate. When foreigners convert the won they receive from selling domestic stocks into dollars, dollar demand increases and the won-dollar exchange rate rises.
Meanwhile, the U.S. Treasury Department said in its report "Macroeconomic and foreign exchange policies of major trading partners" that "the additional weakening of the won in the second half of last year is not consistent with Korea's strong economic fundamentals." At the time, the won-dollar exchange rate exceeded 1,480 won.