Seoul: The South Korean won has seen a significant decline of nearly 6 percent against the U.S. dollar this year, as revealed by central bank data on Sunday. This depreciation coincides with a substantial sell-off by foreign investors, who offloaded more than 156 trillion won (approximately US$102.3 billion) in domestic stocks.
According to Yonhap News Agency, the average exchange rate stood at 1,484.56 won per dollar during the first half of the year, as per the Bank of Korea's Economic Statistics System. This rate represents the second-highest first-half average on record, only surpassed by the 1,493.08 won figure during the first half of 1998 amid the Asian financial crisis.
In March, the exchange rate exceeded the 1,500-won level for the first time since the global financial crisis, an event triggered by conflict in the Middle East. Although the rate briefly fell to the low 1,400-won range, it rebounded above 1,500 won in mid-May and has remained there ever since.
The ongoing weakness of the won has positioned it as one of the worst-performing major currencies this year. As of July 3, the Korean won had depreciated by 5.92 percent against the dollar compared to the end of the previous year, as recorded by Yonhap Infomax, the financial arm of Yonhap News Agency.
Among the Group of 20 currencies, only the Turkish lira and the Indonesian rupiah experienced larger declines, with depreciation rates of 8.23 percent and 6.56 percent, respectively. A significant factor contributing to the won's weakness is the heavy foreign selling of South Korean equities. From the beginning of the year through July 3, foreign investors sold a net 156.56 trillion won worth of shares on the KOSPI market, a figure over five times greater than the 34.58 trillion won in net foreign selling during the global financial crisis in 2008.