SEOUL: The South Korean won's value against the dollar weakened to its worst in over 16 years Tuesday (April 8) as investors shifted to low-risk assets amid the escalating tension in the US-China trade war.
The local currency closed daytime trading with its value per dollar standing at 1,473.2 won, weakening by 5.4 won from the previous trading session. In terms of daytime close, the won plunged to its weakest value since the 1,483.5 won on March 13, 2009.
After nosediving by 33.7 won per dollar on the previous day, the local won opened at 1,471 won per dollar. It later depreciated to 1,473.9 won during intraday trading. The won's value further devalued to 1,477.68 won as of 5:25 p.m. during nighttime trading.
In terms of the nighttime trading closing price, the won had previously weakened to as low as 1,473.7 won on Dec. 31, when the political turmoil in the country sparked by the ousted President Yoon Suk Yeol peaked. Nighttime trading began in July last year.
The weakening of the Korean won results from the rising tension between the US and China. Investors are ditching risk assets, including the Korean won, as conflict between the world's two biggest economies looms.
The US has threatened China with an extra 50 per cent tariff on goods imported into the country if it does not withdraw its 34 per cent counter-tariff.
Beijing vowed to stand firm, commenting “The US threat to escalate tariffs on China is a mistake on top of a mistake” through a statement issued by its Commerce Ministry.
The weakening of the Chinese yuan pulled down the Korean won as well as the local currency is treated as a proxy for the Chinese yuan on the global market, considering the intimate trade relations between Seoul and Beijing.
The Kospi closed daytime trading at 2,334.23 on Tuesday marking a 6.03 points or 0.26 percent gain on-day, showing a partial recovery from the previous day’s market crash. Yet, foreign investors net sold over 642 billion won (US$0.43 billion) on Tuesday, following a 2.09 trillion won (US$0.0014 trillion) dump from a day before. - The Korea Herald/ANN
