FX.co ★ Won Pressured by Capital Outflows

The South Korean won neared the 1,470 mark against the dollar, lingering near its lowest point in seven months, as market sentiment was weighed down by continued capital outflows despite robust economic growth figures. According to data from the Bank of Korea, the nation's economy expanded at its quickest rate in almost four years during the third quarter, with real GDP growing by 1.3% from the previous quarter and 1.8% on a year-on-year basis. Despite this, the won has depreciated by over 4% against the dollar this quarter. The central bank points to increasing overseas investments by local residents and the sale of Korean stocks by foreign investors as major influences. Lee Chan-jin, the governor of the Financial Supervisory Service, indicated that the authorities would assess whether financial institutions are effectively communicating the foreign exchange hedging risks associated with overseas investments. While government initiatives aimed at enhancing consumer protection have mitigated some investor wariness, the lack of proactive measures to bolster the currency has left the won vulnerable.