The Korean won weakened to the mid-1,340s against the U.S. dollar as rising oil prices tied to the Middle East and a sharp drop in local stocks spread risk aversion. Foreign investors' stock selling and purchases of dollar futures added to downward pressure on the won, while dollar selling by exporters capped further gains.
The won-dollar rate was quoted at 1,345.1 as of 3:30 p.m. in the Seoul foreign exchange market on the 13th, up 10 won from the previous session. The currency opened at 1,334.0 and rose as high as 1,345.8 during the day. It rebounded after a day, having fallen to the low 1,330s in intraday trading the previous session, its weakest level for the dollar in two years.
Geopolitical risk in the Middle East and higher crude prices fueled risk-off sentiment. Iran-aligned Houthi rebels in Yemen attacked Saudi Arabia, heightening concerns over oil supply disruptions. Brent crude for December delivery closed overnight at $106.65 a barrel, up 1.84% from the previous session.
The plunge in local stocks and foreign selling also pushed the rate higher. The KOSPI fell more than 6% at one point during the session, triggering a sell-side sidecar for the first time in about two months. Foreign investors net sold 4.5157 trillion won ($3.36 billion) worth of shares on the main board, extending their selling streak to a sixth session. Their purchases of dollar futures added further pressure on the won.
Exporters' dollar selling and a weaker dollar index limited additional gains in the rate. The dollar index (DXY), which measures the greenback against six major currencies, stood at 102.414 around 3:30 p.m., down 0.168 from the previous session.
Meanwhile, the won-yen cross rate fell to as low as 839.91 won per 100 yen during the session, the weakest level since Jan. 2, 2008. As of 3:30 p.m., it stood at 849.44 won, up 5.78 won from the previous session.
