KOSPI falls, won weakens as US-Iran ceasefire uncertainty weighs on markets

A dealer works at a dealing room of Hana Bank in Seoul, Thursday. The benchmark KOSPI closed at 5,460.46, down 181.75 points, or 3.22 percent, from the previous session, while the won-dollar exchange rate rose 7.3 won to 1,507. The Kosdaq also ended lower at 1,136.64, down 22.91 points, or 1.98 percent. Yonhap

Both KOSPI and Kosdaq moved lower Thursday, as growing uncertainty over potential ceasefire talks between the United States and Iran weighed on Korean equities.

The won also weakened, with the exchange rate against the dollar once again breaching the psychologically and technically significant 1,500 level.

Although U.S. stocks ended higher, catching up with reports that Washington and Tehran had entered negotiations, Korean markets appeared to place greater emphasis on news that Iran denied such talks.

Korea’s benchmark KOSPI opened down 0.9 percent at 5,594, slipping below the 5,600 mark at the open. It extended losses throughout the session to close at 5,460.46, down 181.75 points, or 3.22 percent.

The secondary Kosdaq index inched up 0.01 percent to 1,159 at the open, but later reversed course to end the day at 1,136.64, down 22.91 points, or 1.98 percent.

In the Seoul foreign exchange market, the Korean won opened at 1,503 per dollar, down 3.5 won from the previous session’s close. It continued to weaken and finished at 1,507 won per dollar, down 7.3 won.

Amid the ongoing Middle East conflict triggered by U.S. and Israeli strikes on Iran late last month, global and domestic currency and equity markets have grown increasingly volatile.

The won has traded around the key 1,500 level in recent sessions, briefly weakening to 1,517.3 per dollar on Monday, its lowest level in 17 years. It had recovered to the 1,490 range on Tuesday and Wednesday, but then weakened again to the 1,500 level amid persistent uncertainty.

Oil prices dipped slightly overnight but remain elevated, making it difficult for the won-dollar exchange rate to ease.

U.S. West Texas Intermediate crude hovered around $91 per barrel, while Brent crude, the global benchmark, remained above the $100 mark. Dubai crude, which accounts for about 80 percent of Korea’s oil imports, traded even higher at around $142 per barrel.

As oil prices rise, demand for dollars to cover import costs increases, inevitably putting downward pressure on the won.

Market doubts have persisted as Iran’s military strongly rejected claims by U.S. President Donald Trump of ceasefire talks, despite repeated confirmation from the White House.

This has fueled safe-haven demand, lending further strength to the dollar.