Won Weakens for Fourth Day as Global Funds Sell Korean Stocksby
Foreigners pulled $661 million from equities this week
Economic recovery is close to normal pace, finance chief says
The won declined for a fourth day as global funds pulled money from local stocks amid concern that a deepening slowdown in China, South Korea’s biggest export market, will hurt the economy.
Foreign investors sold more South Korean equities than they bought, boosting net sales for the week to $661 million as Chinese data from exports to manufacturing point to a worsening economy. Federal Reserve chair Janet Yellen will speak Thursday in Massachusetts and investors will be on the lookout for clues as to when U.S. interest rates will be raised.
The won fell 0.1 percent to close at 1,192.63 a dollar in Seoul on Thursday, data compiled by Bloomberg show. It has lost 2.5 percent this week and earlier touched 1,194.20, the weakest since Sept. 10.
"Increasing external risks such as the U.S. monetary policy outlook and sluggish Chinese data hurt investor sentiment," said Hong Seok Chan, a currency analyst at Daishin Economic Research Institute in Seoul. "Traders are looking at foreign investors’ dollar-buying related to net sales in Korean stocks."
South Korea’s economic recovery is close to “normal pace,” supported by domestic demand, Finance Minister Choi Kyung Hwan said Thursday in Seoul. While China’s economic structure is expected to undergo significant changes, instabilities will be temporary, Choi said.
Overseas investors have pulled more than $1.4 billion from Korean shares this month, while investing a net $1.2 billion in local bonds.
Government bonds fell on Thursday, with the 10-year yield rising three basis points to 2.16 percent, Korea Exchange prices show. The three-year yield climbed one basis point to 1.63 percent.