16.10.202604:56:45UTC+00South Korean Won Extends Losses on Capital Outflows

The South Korean won hovered around 1,343 per dollar, extending its decline as foreign capital outflows and mounting concerns over AI-related investments pressured local financial markets. Foreign investors pulled a net $19.97 billion from South Korean stocks and bonds in September, marking the eighth straight month of net outflows. The trend continued into October, with overseas investors dumping KRW 3.6 trillion in local equities on Thursday. The selloff was concentrated in Samsung Electronics and SK hynix, reflecting growing unease over lofty AI valuations and intensifying Chinese competition in the memory chip sector.

Externally, the backdrop was mixed. In the United States, producer prices rose 1.3% month-on-month in September, the sharpest increase since March 2022, while annual inflation quickened to 6.3%. The data stoked worries about persistent inflationary pressures and the possibility of further Federal Reserve tightening. At the same time, a pullback in US Treasury yields and a softer dollar provided some offsetting relief for the won.