FX.co ★ South Korean Won Slides Amid Persistent Capital Outflows

The South Korean won weakened to approximately 1,460 against the dollar on Monday, reversing notable gains from the previous session due to ongoing capital outflows. Both corporate and institutional investors continue to redirect funds internationally, influenced partially by South Korea’s obligations under its trade agreement with the United States. This agreement mandates major conglomerates such as Samsung, SK, and Hyundai to channel USD 350 billion into US industries. The substantial commitments to domestic investments underscore the demand for foreign funding, which, in turn, applies consistent downward pressure on the won. Investor caution prevailed following comments by Bank of Korea Governor Rhee Chang-yong, indicating that policy changes would be contingent on future data, a statement perceived by markets to reduce the probability of further rate cuts. Simultaneously, the won faced additional pressure as the dollar remained generally fortified in anticipation of pending US economic data.