South Korean won plunged, halting its recent gains as investors offloaded more stocks than they bought, the first time to do so in nearly two weeks.
The won ended the day 0.2 percent down at 1,041.38 a dollar in Seoul, after earlier surging 0.2 percent. It recently traded at 1,031.55 on April 10, its highest level since August 2008. The won has plunged 0.4 percent so far this week.
Foreign investors divested a net of $57 million local stocks on Friday. The last time the country recorded outflows was on April 14, reported Bloomberg. The one-month implied volatility of the won, which measures the expected shifts in the exchange rate that is used to assign prices to options, has plunged 20 basis points since April 18 to 6.52 percent. It fell one basis point on Friday.
“Importers’ demand for dollars was stronger than exporters selling the U.S. currency,” Bak Jae Sung, a currency trader at Woori Bank in Seoul, told Bloomberg. “Foreigners’ net-selling of South Korean equities also weakened the won.”
The South Korean GDP expanded 0.9 percent in the quarter ending March from the previous quarter, exceeding the economists’ expectation of a growth of 0.8 percent. Yield on government bonds that expire on March 2019 plunged one basis point to 3.17 percent today.
Most South Korean firms such as Samsung and Hyundai have expressed concerns that the stronger won is affecting their profit margins. Recent results by most local multinationals show most of them reported losses, which they attributed to the stronger local currency. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com