Value context and insight. lkm@koreatimes.co.kr
Weaker won boosts Koreans' offshore investment returns, but hurts Koreans living abroad
An electronic board shows the Korean currency trading at 1,466.40 won against the U.S. dollar on the trading floor of Hana Bank in Seoul, Wednesday. Yonhap
By Lee Kyung-min
The Korean currency sliding rapidly to the level of 1,470 won per U.S. dollar is leading to greater gains for Korean investors with offshore assets, but this is straining consumers and exporters, market experts said Wednesday.
The won's sharp depreciation has pushed up investor returns on U.S. dollar-denominated income, benefitting retail investors with U.S. equity holdings as well as YouTubers who receive income in dollars.
However, students studying abroad, Korean workers dispatched overseas and travel-related businesses are experiencing heavier cost pressures in the form of reduced profit margins and weaker purchasing power.
According to the foreign exchange market, the won hit an intraday low of 1,470 won per dollar at around noon Wednesday.
It ended at 1,465.70 won against the dollar as of 3:30 p.m., 2.4 won weaker from the previous session.
The won hovered around the 1,300 won range in May, stabilizing from the low of 1,484 won in April, influenced by U.S. tariff volatilities and ongoing political uncertainties.
The currency has since depreciated to around 1,400 won in late September due to renewed geopolitical tensions and drawn-out U.S.-China trade friction, threatening to reach the 1,500 won level.
Retail investors with overseas equity holdings are gaining greater returns from their U.S. dollar-denominated valuations.
"This means even if the stock price in the U.S. stays the same, Korean investors see a higher return in won terms, because each dollar they hold is now worth more when converted into won," a Woori Bank report said.
YouTubers who receive payments from Google in U.S. dollars are also seeing their income revenues rise automatically, even without higher viewership.
By contrast, Korean students studying abroad and business workers dispatched overseas are facing financial strain in the form of higher living expenses.
Airlines and travel businesses are also suffering from reduced profitability, with their share prices sliding.
The Korean won's sliding, meanwhile, comes despite the export-heavy Korean economy registering a record current account surplus, propelled by strong exports of semiconductors and automobiles.
Many say the currency value will be weighed down by steady capital outflows as Korean investors’ offshore equity purchases continue to outpace foreign capital inflows.
They say the traditional correlation between a current account surplus and currency strength no longer holds for Korea, as U.S. dollars earned through robust exports are being redirected for offshore investments by retail equity investors, pension funds and corporate entities.