An employee of a financial firm looks at a stock price monitor in central Seoul, Thursday. Following the steep overnight fall in the Wall Street, the benchmark KOSPI closed sharply lower at 948.69, down 6.7 percent, or 68.13 points, from the previous day’s trading. / Yonhap |
 KOSPI Falls Below 950
By Yoon Ja-young
Staff Reporter
The local currency nosedived to a 10-year low against the greenback and Seoul stocks plummeted 6.7 percent Thursday, hit by overnight Wall Street plunges and foreign investors' massive sell off of holdings.
The Korean won closed at 1,497 won per dollar, Thursday ― losing 50.5 won from the previous day ― hitting its weakest rate since March 13, 1998, when it closed at 1,521 won.
The fall was mostly due to the overnight collapse of the New York Stock Exchange. The Dow Jones 30 Industrial Average fell to its lowest level in five years, on concerns over U.S. auto manufacturers, worsening economic indices and deflation. The Seoul bourse followed the fall, motivating market participants to rush for safety assets.
The won-dollar exchange rate, which hovered around 1,480 won per dollar through the morning session, broke 1,500 won and once rose to 1,517 won in the afternoon as there were no signs of government intervention.
The local currency has lost around 50 percent in value since July when the rate hovered around 1,000 won per dollar. It once soared to 1,495 won last month following the fall of the Lehman Brothers, but the currency swap deal with the United States helped pull it down to 1,250 won.
However, the rate headed up as concerns over the global recession hit the stock market. Foreign investors dumped 92.4 billion won shares, selling for the eighth consecutive day. Pension funds have been buying stocks to sustain the market, but are facing criticism that they are only helping foreign investors decrease their losses on the Seoul bourse. Foreigners have sold around 2.4 trillion won worth of stocks so far this month, and nearly 40 trillion won over the year.
They are now dumping bonds as well, turning to safer dollar assets. They sold 4.2 trillion won worth of bonds last month. ``Preference for safety assets is growing upon increasing uncertainties about the real economy in the U.S.'' said Kim Young-jun, a market analyst at SK Securities. ``Despite the support by the United States, concern that problems have already started in the real economy are being reflected.''
Since the psychologically important 1,500 won per collar was breached, the pressure for a further rise could continue without government intervention. The trade account deficit is also leaving the country with no resort over the dollar shortage.
The KOSPI closed at 948.69, dipping 68.13, or 6.7 percent, from the previous day. The side-car mechanism was activated during the morning session to halt trading due to the deep plunge.
Construction, securities and machinery shares lost over 10 percent on average. Hyundai Heavy Industries fell over 14 percent, while Shinhan Financial Holdings lost 9.74 percent.
chizpizza@koreatimes.co.kr
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[단독] 르노삼성, 본사 모델로 한국 공략
