Won closes above 1,550 for second day as foreigners dump W4.3tr in shares — highest since financial crisis

By Kim Byeo-ri, The Herald Business

The won-dollar exchange rate closed above 1,550 won for a second consecutive day in weekly trading Wednesday, pressured by heavy net selling of domestic shares by foreign investors.

The won ended the weekly session at 1,555.8 won per dollar on the Seoul foreign exchange market, up 0.9 won from the previous session. The currency opened 2.6 won lower at 1,552.3 won and fell as far as 1,550.7 won during trading before paring losses just before the close.

The two-day streak extended a record set Tuesday, when the won closed at 1,554.9 won — its highest since March 5, 2009, when it hit 1,568 won during the global financial crisis.

Foreign investors, who have been net sellers of domestic shares for 10 consecutive trading sessions, sold a net 4.3 trillion won ($2.77 billion) on the main Kospi market Wednesday, pushing the exchange rate higher.

However, remarks by Federal Reserve Chair Kevin Warsh that inflation risks had diminished tempered dollar strength and capped the won's decline. The dollar index, which measures the greenback against six major currencies, fell 0.176 to 101.235 from the same time the previous day.

Verbal intervention by Finance Ministry Second Vice Minister Heo Jang also appeared to influence trading. Speaking Wednesday morning, Heo said the government stood ready to "immediately take necessary market-stabilization measures if the exchange rate diverges from fundamentals and one-sided moves intensify."

The yen-dollar rate also fell as dollar strength eased. After surging to 162.834 yen the previous day, the rate dropped to the low 162-yen range Wednesday before extending its decline further after the weekly close, touching 161.124 yen around 3:50 p.m. As the yen's weakness moderated, the won-dollar rate briefly dipped below 1,550 won in after-hours trading.

The won-yen cross rate rose 3.2 won from Tuesday's 3:30 p.m. benchmark to 958.83 won per 100 yen.