The South Korean won has experienced a significant drop, reaching its fourth-lowest level against the US dollar in March. This decline is attributed to foreign investors selling off Korean assets amid global market volatility, according to financial data released on Sunday.
Data from the Bank of Korea and Infomax reveals that the won averaged 1,489.3 won per dollar for the first 27 days of March, based on the daily won-dollar exchange rate at 3:30 p.m. KST.
This marks a historically weak period for the won, only surpassed by the averages of 1,499.38 won in December 1997, 1,701.53 won in January 1998, and 1,626.75 won in December 1998, all occurring in the wake of the Asian financial crisis of 1997.
On a weekly basis, the average won-dollar rate reached 1,503.4 won last week, exceeding the 1,500 won threshold for the first time in 17 years, specifically since the second week of March 2009.
In percentage terms, the won depreciated by 4.72 percent against the US dollar in the first 28 days of March, representing the most substantial monthly decline among major global currencies.
Meanwhile, the US Dollar Index (DXY), which gauges the dollar’s strength against a basket of six major currencies including the euro and Japanese yen, increased by 2.6 percent during the same period.
Other currencies also weakened against the dollar, with the euro falling 2.62 percent and the yen dropping 2.58 percent. The Chinese yuan saw a decline of 0.84 percent, while the Taiwan dollar decreased by 2.11 percent.
The significant weakening of the Korean won is largely attributed to large-scale sell-offs by foreign investors. These sell-offs are fueled by ongoing geopolitical tensions in the Middle East and growing concerns regarding the future prospects of artificial intelligence (AI) technology.
Foreign investors have sold a net 29.8 trillion won ($19.7 billion) worth of Korean stocks on the main Korea Composite Stock Price Index (KOSPI) in March, following a previous net sell-off of 21.1 trillion won in February.
Market analysts anticipate that the Korean won will likely remain near the 1,500 won level against the US dollar, even after the geopolitical situation in the Middle East stabilizes.
