FX.co ★ South Korean Won Extends Losses on Heavy Outflows

On Monday, the South Korean won fell to approximately 1,470 against the US dollar, maintaining its position near a seven-month low. This depreciation is primarily driven by ongoing foreign equity outflows and robust corporate demand for US dollars. In November, offshore investors recorded their largest monthly net sell-off of Korean shares, reversing the buying trend seen over the previous two months and underscoring a consistent exit of capital from domestic markets. Additionally, companies hastened their accumulation of dollar reserves, evidencing the fastest monthly uptick this year, as they sought to hedge against foreign exchange volatility and expand foreign investments. Economically, the climate dimmed with another month of manufacturing contraction, as indicated by the Purchasing Managers' Index (PMI) stagnating at 49.4, reflecting a continued decline in output and new orders. These factors limited support for the won despite strong exports, which saw an 8.4% increase in November.