The won-dollar exchange rate surpassed 1,350 won for the first time in 13 years since the global financial crisis on the 29th. The KOSPI fell more than 2%. The storm comes following Fed Chairman Jerome Powell hinted at a intensive rate hike at the Jackson Hole meeting, an economic policy symposium.
On the same day, the won-dollar exchange rate in the Seoul foreign exchange market closed at 1,350 won and 40, up 19 won by 10. It is the highest level since April 28, 2009 (1,356 won 80) during the global financial crisis. It broke the ointment point (1345 won 50) recorded on the 23rd. It was the largest one-day increase (1.43%) this year.
The won-dollar exchange rate started trading at 1342 won 50, up 11 won 20 ago, and soared to 1,350 won 80 at 12:25 noon. After that, as the quantity estimated to be due to government intervention came out, it fell to 1,340 won per dollar, but rose once more to 1,350 won and ended the transaction. Hong-cheol Moon, a researcher at DB Financial Investment, said, “The currency of major countries weakened overall due to Chairman Powell’s remarks, but the KRW depreciated significantly. analyzed,” he said. There are concerns in the market that if Korea’s trade deficit grows due to the global economic downturn, the won’s weakness (the won-dollar exchange rate rises) may accelerate.
Lee Chang-yong, governor of the Bank of Korea, said in an interview with Bloomberg TV, “The BOK does not set a specific exchange rate level as a target, and will set the exchange rate according to market supply and demand.”
The stock market was also shocked. The KOSPI index fell 2.18% to close at 2426.89. The KOSDAQ index fell 2.81%. Japan’s Nikkei 225 Index and Taiwan’s Traceability Index also plunged 2.66% and 2.31%, respectively.
2426, which lowered the KOSPI by 54P… Biggest drop in over two months
Foreigners to ‘sell’ in 10 trading days… Japanese stocks fell 2.66%, Taiwan 2.31%
Asian stock markets, including South Korea, plunged on the 29th following US Federal Reserve Chairman Jerome Powell’s intense hawkish remarks were made. As Chairman Powell made it clear that he would continue to tighten austerity and contain inflation, even in the face of an economic downturn, investor sentiment is likely to shrink significantly. Experts predicted that the stock market would be at an inflection point following the ‘bear market rally’ that lasted from July to August is over. While the domestic and global stock markets are under strong downward pressure, it is highly likely that a market with increased volatility will unfold depending on the results of economic indicators.
○ Asian stock market ‘Warr’ at Powell’s remarks
On the same day, the KOSPI index plunged 2.18% to close at 2426.89. This is because institutions and foreigners are pouring out properties at the same time. On that day, institutions net sold 558.7 billion won and foreigners 46.2 billion won. On the other hand, individuals net bought 599.9 billion won worth of stocks, receiving orders from institutions and foreigners. In terms of the daily decline, it recorded the biggest drop in more than two months since June 22 (-2.74%).
Foreigners, who continued to buy despite the rise in the exchange rate, eventually switched to ‘sell’. Foreigners bought 1.298.1 trillion won worth of stocks in the stock market from the 16th to the 26th of this month, continuing their buying advantage for nine consecutive days. However, as Chairman Powell re-emphasized his intention to raise interest rates, it eventually switched to selling following 10 trading days. As foreigners turned to selling, the won-dollar exchange rate rose sharply. The won-dollar exchange rate closed at 1,350 won 40, the highest in 13 years and 4 months. The KOSDAQ index, which is a collection of growth stocks, fell even more. It fell 2.81% on the day and closed at 779.89.
Most major Asian markets also fell. Japan’s Nikkei 225 Index fell 2.66% to close at 27,878.96. Taiwan’s Traceability Index also fell 2.31% to close at 14,926.19. Hong Kong’s Hang Seng index also showed a sluggish figure.
It is analyzed that it was the effect of the hawkish remarks made by central bank governors of major countries at the annual economic policy symposium (Jackson Hall Meeting) held in Jackson Hole, Wyoming, USA on the 26th. In particular, Chairman Powell emphasized that interest rates will continue to rise until the US inflation rate approaches the 2% target. “This is not a point to stop or take a break from raising rates,” Powell said. You have to suffer to catch the price,” he said.
<img src="https://img.hankyung.com/photo/202208/AA.31054288.1.jpg" alt=" The KOSPI index plunged 2.18% to 2426.89 on the 29th in the followingmath of ‘hawkish (preferring monetary tightening)’ remarks made by Fed Chairman Jerome Powell at the Jackson Hole meeting, and the won-dollar exchange rate was 19 won 10 won. The trade was completed before 1,350 won 40 on the right. / Reporter Kim Beom-jun “/>
○ “Next month’s inflation and FOMC price variables”
Experts agreed that the stock market would enter an inflection point following the bear market rally (an uptrend in a bear market) as the US interest rate hike is expected to be prolonged. It is also expected that the ‘box price’ market will continue for the time being, in which the technical rebound and decline are repeated due to the exaggerated fall.
Securities companies adjusted the expected fluctuation range of the KOSPI index in the second half of the day. Shinhan Financial Investment and Kiwoom Securities predicted that next month’s KOS index would fluctuate between 2350-2600 and 2380-2680, respectively. Daishin Securities also lowered the upper range of the KOSPI index from 2650 to 2550.
However, despite the short-term decline, there are many forecasts that the KOSPI will not fall below the July low (2276.63). Chairman Powell’s remarks have not changed significantly from the previous monetary policy, and it is expected that the intensity of interest rate hikes in the future will not be further strengthened.
Yoon Seok-mo, head of Samsung Securities’ research center, said, “The stock market has been relatively optimistic compared to the interest rate and exchange rate forecasts, and the stock market, which has been ahead for the time being, will be in the process of normalizing once more.” “As it is estimated that the level is at the lowest level, the possibility of the stock market breaking through the year-end is low,” he said. Yoo Seung-chang, head of the research center at KB Securities, also explained, “Inflation seems to have peaked out considering international oil prices.”
Analysts predicted that the Federal Open Market Committee (FOMC) results scheduled for September 21 and the US Consumer Price Index (CPI) to be released on the 13th of next month will determine the direction of the stock market. As a result, some analysts predict that the stock market will fluctuate between optimism and pessimism regarding inflation and monetary policy for the time being.
Korea Investment & Securities said, “It is necessary to respond to the market focusing on industries unrelated to macroeconomics while avoiding industries that are vulnerable to rising interest rates.” Daishin Securities recommended that the KOSPI should focus on risk management and strengthening portfolio defenses even if it attempts to rebound early next month.
By Jo Mi-hyeon/Bae Tae-woong, staff reporter mwise@hankyung.com
