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KOSPI, won weaken as US-Iran tensions spark oil price spike
The won-dollar exchange rate and the KOSPI are displayed on a board at the dealing room of Hana Bank’s headquarters in Seoul, Monday. The KOSPI closed at 5,808.62, down 50.25 points, or 0.86 percent, from the previous session, while the Korean won closed onshore trading at 1,489.3 per dollar, down 6.8 won. Yonhap
By Jun Ji-hye
KOSPI failed to extend its two-session winning streak Monday as the collapse of initial ceasefire talks between the United States and Iran, along with Washington’s subsequent move to impose a maritime blockade on Tehran, weighed on recently improved investor sentiment.
The benchmark index opened at 5,737.28, down 121.59 points, or 2.08 percent, from the previous session, before closing at 5,808.62, down 50.25 points, or 0.86 percent.
Secondary bourse Kosdaq also opened lower at 1,076.85, down 16.78 points, or 1.53 percent, but pared its losses to close at 1,099.84, up 6.21 points, or 0.57 percent, from the previous session.
Rising tensions in the Middle East, which drove global oil prices above $100 per barrel, also put pressure on the Korean won. The currency opened at 1,495.4 won per dollar in the Seoul onshore foreign exchange market, weakening by 12.9 won from the previous session, and closed at 1,489.3 won.
The won had stayed in the lower 1,480 range on Friday, the previous trading day, finishing regular trading at 1,482.5. However, the renewed downward pressure pushed it closer to the 1,500-won level again.
As of 9:12 a.m. Korea time, Brent crude, the global benchmark, was trading at $103.44 per barrel, up about 8.7 percent from the previous close. West Texas Intermediate futures also rose 8.7 percent to $104.93 per barrel.
Market jitters intensified after U.S. President Donald Trump announced plans on Sunday (local time) to impose a blockade on all vessels passing through the Strait of Hormuz following the breakdown of ceasefire negotiations with Iran.
The move is widely seen as an attempt to maximize pressure on Tehran by cutting off its oil exports, a critical source of funding.
Amid the U.S. hardline stance, which has heightened geopolitical tensions, analysts warned that downward pressure on KOSPI is likely to persist, while the won could weaken beyond the 1,500 level against the dollar.
“Following the failure of talks between the U.S. and Iran, President Trump’s blockade announcement has reignited geopolitical risks,” said Min Kyung-won, a researcher at Woori Bank. “KOSPI, which had been supported by hopes for a deal, now faces the risk of foreign capital outflows, while reverse remittance flows may add downward pressure on the won.”
Lee Min-hyuk, a researcher at KB Kookmin Bank, added, “With negotiations collapsing and military tensions resurfacing, demand for safe haven assets is expected to strengthen further.”