Foreign Investors Drive Positive Momentum in KOSPI... USD/KRW Exchange Rate Drops to the 1,380₩ Level [Korea Economic Daily FX Market Watch]

Korea Economic Daily

Summary

It was reported that a strong trend of foreign investors buying domestic stocks has led the USD/KRW exchange rate to fall to the 1,380₩ level.
In the domestic stock market, foreigners were net buyers of about 893.4 billion₩ in the KOSPI, which subsequently closed higher at 3,210.81.
The U.S. Dollar Index inched down, the KRW/JPY cross-rate increased, and the Japanese yen also showed strength.

With strong buying from foreign investors in domestic stocks, the USD/KRW exchange rate declined (KRW value increased). The upward trend in the exchange rate seen for three trading days reversed and fell to the 1,380₩ range.

On the 21st at the Seoul FX market, the USD/KRW exchange rate (as of 3:30 p.m.) closed at 1,388.20₩, down 4.80₩ from the previous trading day. The upward trend that had continued since the 16th ended for the first time in a while. It was the first time in three trading days that the rate fell below 1,390₩.

The exchange rate started the day at 1,392.10₩, down 0.90₩, fluctuated in the 1,390₩ range, and dropped into the 1,380₩ band in the afternoon.

Analysts believe that heightened market caution as the exchange rate rose to the 1,390₩ level recently, along with foreign buying in the domestic stock market, put downward pressure on the exchange rate. On the day, foreigners made net purchases of about 893.4 billion₩ in the KOSPI market. KOSPI closed up 22.74 points (0.71%) from the previous day at 3,210.81.

The U.S. dollar weakened slightly. The U.S. Dollar Index, which shows the value of the dollar versus the currencies of six major countries, slipped 0.24% from the previous session to 98.306.

The Japanese yen strengthened. Although Japan's ruling party failed to secure a majority in the House of Councillors election held on the 20th, the market was seen to have already priced in the results.

As of 3:30 p.m., the KRW/JPY cross-rate stood at 937.94₩ per 100 yen, up 1.56₩ from 936.38₩ at 3:30 p.m. the previous day. The JPY/USD rate fell 0.53% to 147.98 yen.

Jin-Kyu Kang, journalist josep@hankyung.com