hankyoreh

Screens show the dollar-to-won exchange rate in the exchange dealing room at Hana Bank’s headquarters in Seoul.(Yonhap News)

The value of the South Korean won plunged to its lowest levels in the past year on Thursday.

As of 9:50 am on Thursday, the won-to-US dollar exchange rate on the Seoul foreign exchange market had jumped by 10.4 to reach 1,185.4. The last time the exchange rate closed above 1,180 won to the dollar was on Sept. 14, 2020, when it finished at 1,183.5.

If the rate had finished at its early level, it would have been its highest since the 1,186.9 recorded on Sept. 11 of last year. The rise in the exchange rate was also the largest over a single trading day since June 17, when it climbed by 13.2 won.

The sharp drop in the won’s value was attributed first to the effects on the international financial market from concerns about the potential default of the Evergrande Group, a Chinese real estate conglomerate, which surfaced during the exchange’s closure during the Chuseok holiday.

On the New York overseas non-deliverable forward (NDF) market, the won-to-dollar exchange rate (one-month) reached as high as 1,187.6 on Monday.

Another factor in the weak won is the global strength of the dollar following a US Federal Reserve monetary policy meeting. The dollar index, which indicates the dollar’s value compared with the euro and five other major currencies, was calculated at 93.46, a rise of 0.28%.

But with a trend of net purchasing by foreign investors on the domestic market, observers are watching to see whether the spike in the exchange rate eases.

Foreign investors have been purchasing 157 billion won in stock on the KOSPI market. At the time of writing, the KOSPI is at 3,112.58, representing a drop of 27.93 points or 0.89%.

By Han Gwang-deok, finance correspondent

Please direct questions or comments to [english@hani.co.kr]