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| Electronic signboards at a dealing room of Hana Bank in Seoul show the benchmark KOSPI fell 2.45 percent to 2,169.29 points, Wednesday, while the Korean currency closed at 1,439.9 won per dollar, weakening by 18.40 won from the previous close. Yonhap |
KOSPI falls below 2,200; won-dollar rate nears 1,440
By Yi Whan-woo
The Korean currency plunged below a 13-and-a-half-year low of 1,440 won per dollar at one point during Wednesday's trade, while the benchmark KOSPI closed under the 2,200 point level for the first time in more than two years.
The won closed at 1,439.9 per dollar, depreciating by 18.4 won from Tuesday's close, after falling to as low as 1442.2 per dollar during intraday trading as the dollar strengthened relentlessly against other key currencies amid fears of disrupted energy supplies to Europe.
It marked the first time for the Korean currency to slide below the 1,440 level since March 16, 2009, when it ended at 1,488 won in the midst of the 2008-09 global financial crisis.
The won's extended losing streak against the greenback came as the U.S. dollar index against a basket of major currencies rose about 0.5 percent to hit a new high of 114.7 in Asia trade.
In particular, the euro lost 0.45 percent to $0.955, not far off from its recent 20-year trough of $0.9528, amid the protracted war between Russia and Ukraine and growing concerns of a cut in Russian gas supplies to the eurozone.
The Korean currency's freefall was attributed to the plummeting stock market in Korea as foreign investors pulled their money out in search of safe haven assets.
Foreigners, who have been net sellers for 11 consecutive trading days, shed 149.7 billion won worth of stocks on Wednesday, while institutional investors dumped 178.2 billion won worth of shares.
Accordingly, the KOSPI retreated 2.45 percent to 2,169.29 points, Wednesday ― the lowest level since July 10, 2020 ― after it ended a four-session losing streak and gained 2.92 percent, Tuesday.
The tech-heavy Kosdaq fell 3.47 percent to 673.87 points.
Despite concerns over a weakening won, the Bank of Korea (BOK) maintains the view that the country's foreign reserves remain at a stable level.
It has $740 billion in net foreign assets and is the ninth-largest holder of foreign currency reserves as of the end of July.
To stabilize the stock market, the Financial Services Commission (FSC) held a joint meeting with the Financial Supervisory Service (FSS) immediately after the market's close and announced that they discussed response measures.
Both the FSC and FSS are the country's main financial regulators, with the former responsible for making policies and the latter in charge of ensuring whether financial firms are observing those policies.
During the meeting, FSC Vice Chairman Kim So-young authorized the resumed operation of a 10 trillion won ($6.9 billion) fund initially created during the early stage of the coronavirus pandemic in March 2020.
The fund was aimed at countering the impact of the pandemic on the stock market. But the fund was never put to use as the market recovered.
The government came up with two similar funds in the past ― during the 2002-03 credit card crisis and during the 2008-09 global financial crisis.
