Frozen Investor Sentiment Amid Soaring Exchange Rates... KOSPI Down 1.5%

Won-Dollar Exchange Rate Surges to 1384 Won
Market on Alert Ahead of Chuseok Long Holiday Amid Sharp Rise in US Interest Rates

On the 7th, when the won-dollar exchange rate surpassed 1,380 won for the first time in 13 years and 5 months, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Ji Yeon-jin] The KOSPI index is widening its intraday losses on the 7th due to a sharp rise in the won-dollar exchange rate. Ahead of the long holiday break for Chuseok, the domestic stock market is being dragged down by simultaneous selling from foreigners and institutions, who are cautious about uncertainties.

As of 10 a.m. on the day, the index fell 36.85 points (1.53%) from the previous day to 2373.17. Although individuals are net buyers with purchases worth 338.2 billion won, foreigners and institutions are net sellers with sales of approximately 181.3 billion won and 168.4 billion won respectively, expanding the decline.

This selling pressure follows the previous day’s decline in the U.S. stock market due to rising interest rates and the continued upward trend in the won-dollar exchange rate. At the same time, in the Seoul foreign exchange market, the won-dollar exchange rate surged 13 won (0.95%) from the previous day to 1384.7 won.

On the previous day in the New York stock market, concerns about Federal Reserve (Fed) tightening persisted, while corporate bond issuance flooded the bond market, triggering a rise in interest rates. The U.S. services Purchasing Managers’ Index (PMI) rose compared to the previous month, contrary to market expectations, which is analyzed to have stimulated the rise in interest rates.

The 10-year U.S. Treasury yield jumped 16 basis points from the previous day to close at 3.35%, and the 2-year yield, sensitive to policy rate outlooks, also rose 11.6 basis points to settle around 3.5%. The dollar index surpassed 110 points due to interest rate effects.

Yumi Kim, a researcher at Kiwoom Securities, pointed out, "As caution surrounding major events such as the August U.S. Consumer Price Index (CPI) and the September Federal Open Market Committee (FOMC) accumulates over time, the negative factors emerging in the bond and foreign exchange markets are also adversely affecting the stock market at this point."

On the 7th, when the won-dollar exchange rate surpassed 1,380 won for the first time in 13 years and 5 months, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mo Honam munonam@

Among the top market capitalization stocks in KOSPI, Samsung Electronics fell 1.75% to 56,100 won, while SK Hynix and Samsung Biologics are recording declines of around 1%. Hyundai Motor and Samsung SDI are showing slight declines, while NAVER and Kakao are experiencing drops exceeding 2%. On the other hand, LG Energy Solution and Kia are showing firm gains.

At the same time, the KOSDAQ index is down 12.16 points (1.56%) to 767.30. Individuals are net buyers with purchases worth 126.4 billion won, while foreigners and institutions are net sellers with sales of 93.8 billion won and 31.9 billion won respectively.

In the KOSDAQ market, 1,220 stocks are declining. Only 228 stocks are rising. Kakao Games plunged 4.27% due to foreign selling pressure, and Pearl Abyss is also down more than 3%. Celltrion Healthcare and Celltrion Pharm are down about 2%, while EcoPro BM and L&F are also down more than 1%. Conversely, HLB, EcoPro, and Alteogen are showing slight gains.

Korea Information & Communications recorded a daily upper limit after news spread that Apple Pay will soon be available in Korea. Payment service provider KG Inicis is also recording gains exceeding 10% on the day. Jung-hoon Seo, a researcher at Samsung Securities, said, "Since the Jackson Hole event, caution about tightening across the financial markets has heightened further," adding, "Europe’s energy issues and China’s COVID lockdown measures are also issues that demand market attention."

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