South Korean Won lost as markets reel from geopolitical tensions

The South Korean currency fell sharply to a 17-year low against the US dollar on Tuesday as the escalating Middle East conflict fuelled fears of further disruptions to global oil supplies and broader economic impacts.

The won was quoted at 1,530.1 won per dollar, down 14.4 won from the previous session, extending its losing streak to a fifth consecutive session, reports Yonhap news agency.

Tuesday’s level marked the lowest since March 9, 2009, on a closing basis, when the won hit 1,549 as the country grappled with the global financial crisis. “We are closely monitoring the market, as foreign investors have been selling local stocks heavily,” Yoon Kyung-soo, director general of the Bank of Korea’s international department, told a press briefing, noting that the pace of the won’s depreciation has been rapid.

“If market sentiment becomes overly one-sided and the won shows excessive divergence from other currencies, we will take action,” he added. The won has hovered around the psychologically significant 1,500 mark in recent sessions, as the war, which began in late February following U.S.-Israeli strikes on Iran, shows no sign of ending.

Higher oil prices pressured the won by boosting demand for dollars for crude imports. South Korea relies heavily on imports for energy. The benchmark Korea Composite Stock Price Index (KOSPI) fell 4.26 percent to 5,052.46 on Tuesday, as offshore investors dumped a net 3.84 trillion won ($2.51 billion) worth of shares.