Korean won slumps against US dollar on expectations of Fed rate hike

The KOSPI, Kosdaq indices and won-dollar exchange rate is seen on an electronic signboard at a dealing room at Hana Bank in Seoul, Tuesday. Yonhap

The South Korean won weakened against the U.S. dollar Tuesday amid renewed expectations that the U.S. Federal Reserve would raise its rates this year.

The won traded at 1,539.1 won per dollar, down 2.1 won from the previous session, as of 3:30 p.m., partly hit by a sell-off by foreign investors in local stocks.

The won opened at 1,539.4 won per dollar earlier in the day but tumbled to as low as 1,542.1 won at one point, marking the weakest level since June 8.

Last week, the U.S. Fed held its benchmark interest rate steady in its first rate decision since new Chair Kevin Warsh took office, but at least half of its policymakers anticipated a higher rate later this year.

Although global oil prices have declined on the back of progress in peace talks between the U.S. and Iran, the won has been slipping due to expectations of a stronger U.S. dollar.

In line with the overnight selling on Wall Street, the benchmark Korea Composite Stock Price Index plunged nearly 10 percent to close at 8,203.84.

Foreign investors sold a net 4.1 trillion won ($2.6 billion) worth of local stocks on Tuesday.