Recently, the won-dollar exchange rate ended weekly transactions after exceeding 1,500 won for six straight days. Lee Jae-myung, the president, asked Koo Yun-cheol, the deputy prime minister for the economy and Minister of Strategy and Finance, at a Cabinet meeting on the 26th whether the rise in the exchange rate was due to foreign investors selling stocks following gains in the Korean stock market, and Koo answered to that effect.
At the Cabinet meeting that day, when Deputy Prime Minister Koo reported on recent macroeconomic conditions, President Lee said, "Regarding the foreign exchange market, now the (won-dollar rate) has exceeded 1,500 won." He added, "One of the main reasons seems to be foreign selling in the stock market, with foreigners in any case selling stocks, converting them into dollars, and creating considerable demand to move out."
President Lee said, "But this is because the Korean stock market has risen about threefold now." He went on, "So that means the valuation of foreign-held stocks has risen about threefold," and asked, "Is this because, as the weight of what they hold, their exposure to Korean assets, has increased, they are adjusting their weights?"
Deputy Prime Minister Koo replied, "When you were inaugurated, KOSPI's market capitalization was about 2,300 trillion won," adding, "But now, because stock prices are so strong, it has increased by about 4,000 trillion." He continued, "As foreigners saw valuations of Korean assets rise, they sold about 110 trillion won in the first half." He added, "As they rebalanced about 10% and sold, then exchanged the proceeds, demand for dollars increased, so for now the foreign exchange market has temporarily exceeded 1,500 won."
President Lee asked, "The current account surplus is widening, right?" Deputy Prime Minister Koo said, "Even though we have a current account surplus, foreigners, seeing higher asset valuations, are selling some holdings, and in that process, demand for foreign exchange is increasing." Koo said, "The saving grace is that foreigners' shareholding ratio in Samsung Electronics is falling," adding that the exchange-rate impact from stock selling and currency exchange would weaken.
Meanwhile, the won-dollar exchange rate ended weekly transactions above 1,500 won for six straight days from the 15th. On the day, it opened at 1,515 won, a slight drop from the previous trading day.