 |
(Yonhap News) |
KOSPI drops 2.64%, Korean currency tumbles to 1,195.8 won vs. U.S. dollar
Korea’s stock market had another turbulent session on Monday, with key indexes struggling with heavy sell-offs amid growing concerns over the debt problem plaguing the eurozone and recession fears in the U.S. economy.
The KOSPI closed down 44.73 points, or 2.64 percent, at 1,652.71, on Monday. The tech-heavy KOSDAQ market tumbled 36.96 points, or 8.28 percent, to 409.55.
The local currency ended at 1,195.8 won against the U.S. dollar versus 1,166.0 won the previous session, amid the continued preference for safe haven currencies like the U.S. dollar despite the interventions by the local authorities keen to prevent the won from depreciating further.
In the year to date, the Seoul bourse has lost 19.42 percent, while the junior stock market has plunged 19.80 percent.
The drop in the stock market followed a week of turmoil worldwide as investors fretted about the lack of concrete measures that could resolve the ongoing sovereign debt woes in Europe and growing concerns about the U.S. economic slowdown despite the Federal Reserve’s “Operation Twist” move aimed at reducing long-term interest rates.
KOSPI got off to a hopeful start with a gain of 1.36 percent on hopes that the Group of 20 leading economies might coordinate a policy to tackle the global economic challenges. But the sentiment quickly turned sour, led by a selling spree by individual investors.
“The key negative factors remain the same,” said Park Jung-jae, analyst at Korea Investment & Securities. “Unless we see a specific measure in the offing, the downward trend is likely to continue for a while.”
The local currency suffered a loss of nearly 30 won to close at 1,195.80 won against the greenback, a 13-month low, as investors rushed to seek safety in the U.S. dollar.
The heady drop in the value of the Korean won came as the global capital flight spread to emerging countries including Asia’s fourth-largest economy.
The Korean won began its trade at 1,180.00 won on Monday before gaining a bit to 1,169 won. But the strong buy orders for the dollar boosted the exchange rate to the 1,190 won level in the following hours.
The demand for the dollar intensified toward the end of the trade session, while the stock market went under heavy sell-offs, contributing to an additional weakening of the Korean won.
Foreign investors sold a net 260 billion won worth of shares on Monday, injecting downward pressure to the country’s stock and currency market.
By Yang Sung-jin (
insight@heraldcorp.com)
