Koreans' offshore investments undercut won strength despite record current account surplus
The Korean won slid to a seven-month low even as the export-heavy economy posted a record current account surplus, weighed down by steady capital outflows as Korean investors’ offshore equity purchases outpaced foreign inflows, analysts said Sunday. The sharp decline is explained by foreign investors’ profit-taking from the KOSPI rally. Their continued buying propped up the won until October, but a selloff of over 7 trillion won ($4.8 billion) in the first week of this month led to a pronounced weakness in the Korean currency. Many analysts say the traditional correlation between a current account surplus and currency strength no longer holds for Korea, as the U.S. dollars earned through robust exports are being redirected for offshore investments by retail equity investors, pension funds and corporate entities. The Korean currency may gain slightly in the second half of the year, influenced by the tempered strength of the U.S. currency, observers say. However, the currency is likely to remain weak overall through the end of the year, with its value not improving better than 1,400 w
