Korean currency tumbles due to ‘emerging country shock’

The Korean financial market widely swayed on Monday due to "emerging country shock" that hit the global financial market. Korean stock market had been expected to remain relatively stable by differentiating itself from other emerging countries saddled in financial crises. It experienced fluctuations Monday in the wake of collective plunges of Asian stock markets including Japan, following sharp declines of the U.S., and European markets last weekend.

The benchmark KOSPI index plummeted to 1,899.76 soon right after market opening Monday morning, but narrowed the decline in the afternoon to close at 1,910.34, down by 30.22 points (1.56 percent) from Friday’s close. Since August last year, it is the first time in five months that the KOSPI Index fell below the psychologically important 1,900 level. In Seoul’s foreign exchange market, the Korean currency closed at 1083.6 won against the dollar, down by 3.2 won from the previous trading day. The won-dollar rate has surged by 23.9 won since January 17.

Asian stocks were on shaky ground as well. Amid mounting worries over Abenomics, appreciation of the Japanese currency has led a 2.51-percent decrease of the Nikkei average. Stocks in China, Taiwan and Hong Kong also receded 1 to 2 percent each. The U.S. will assemble the Federal Open Market Committee on Thursday morning (Korea time), and decide whether to further reduce its quantitative easing. If the federal committee chooses to another cut, flight of global investment funds from emerging countries is feared to further accelerate.