Won-Dollar Exchange Rate Volatility Expands... $5 Billion Net Inflow of Stock Funds in November

Bank of Korea to Announce 'International Finance and Foreign Exchange Market Trends Since November 2020' on the 10th

On the 8th, at the Woori Bank dealing room in Jung-gu, Seoul, employees are working as the KOSPI opened at 2745.13, down 0.31 points (0.01%) from the previous trading day. The KOSDAQ opened at 927.69, up 0.81 points (0.09%) from the previous trading day. The won-dollar exchange rate started at 1084.0 won, up 1.9 won from the previous trading day. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Jang Sehee] Last month, foreign securities investment funds in our financial market recorded a net inflow of over 5 billion dollars. The scale of net inflow expanded due to improved investment sentiment following the easing of uncertainties related to the US presidential election and progress in the development of the novel coronavirus (COVID-19) vaccine. This is the largest amount since September 2013 (7.66 billion dollars).

According to the "International Finance and Foreign Exchange Market Trends since November 2020" announced by the Bank of Korea on the 10th, foreign investment funds in domestic securities last month showed a net inflow of 5.07 billion dollars.

While foreign equity funds recorded a net inflow of 5.52 billion dollars, bond funds saw a net outflow of 450 million dollars. The Bank of Korea analyzed that net outflows have continued due to low arbitrage incentives and maturity repayments.

A Bank of Korea official explained, "Stock prices in both advanced and emerging countries rose due to strengthened global risk appetite," adding, "It appears that Korean stocks, perceived as risky assets, were also affected." The net outflow of bond funds in September was limited to 10 million dollars, but last month the net outflow expanded to 230 million dollars.

As the global financial market fluctuated, volatility in the won-dollar exchange rate also increased. The average daily fluctuation range of the won-dollar exchange rate (compared to the previous day) grew from 3.4 won (0.30%) in October to 4.1 won (0.36%) in November.

Meanwhile, last month, the foreign currency borrowing conditions of domestic banks remained stable, with the borrowing spread of domestic banks staying at a low level. The CDS premium on foreign exchange bonds (based on 5-year government bonds) last month was 23 basis points, maintaining a low level similar to the previous month (54 basis points).

This content was produced with the assistance of AI translation services.