The Korean currency's recent weakness may be affected by expectations about strong demand for US dollars linked to an investment pledge under a trade deal between Seoul and Washington, an industry report said Sunday.
Song Min-ki, a researcher at the Korea Institute of Finance, said in the report that worries about a slowdown in exports amid US tariff pressures, combined with stronger demand for US dollars related to the investment package, have heightened expectations that the won will weaken further against the dollar in the future.
"On the surface, the weakness is closely tied to a supply-demand imbalance caused by heavy overseas securities investment by domestic investors," Song said.
Residents' overseas securities investment came to $129.4 billion between January and November last year, exceeding the country's current account surplus of $101.8 billion over the same period, according to the report.
Song said the surge in overseas investment likely created a significant supply-demand imbalance in the domestic foreign exchange market, though it does not fully explain the recent spike in dollar demand. (Yonhap)
