iM Securities "KRW weakens due to AI adjustment... turns strong when the stock market rebounds"
Last week, the won/dollar exchange rate was 1,363 won, up 2.15% from the previous week.
Quick Look
- iM Securities analyzed that the domestic stock market adjustment due to concerns about a decline in AI investment triggered foreign stock selling and the weakening of the won.
- Last week, the won/dollar exchange rate was 1,363 won, up 2.15% from the previous week, and iM Securities predicted this week's exchange rate range to be 1,330 to 1,380 won.
AI-generated summary
Why It Matters
As concerns grew about a decline in AI investment after the U.S. midterm elections, a correction occurred in the domestic stock market, focusing on semiconductor stocks, and foreigners' selling of domestic stocks expanded. Accordingly, the won/dollar exchange rate last week was 1,363 won, up 2.15% from the previous week.
iM Securities analyzed on the 9th that last week's artificial intelligence (AI)-related stock price adjustment stimulated foreigners to sell domestic stocks, increasing pressure on the won.
As concerns grew about a decline in AI investment after the U.S. midterm elections, a correction occurred in the domestic stock market, focusing on semiconductor stocks, and foreigners' selling of domestic stocks also increased. Accordingly, the won/dollar exchange rate last week was 1,363 won, up 2.15% from the previous week.
Park Sang-hyeon, an economist at iM Securities, said, “The won has exposed its vulnerability to AI investment risks,” and added, “Whether AI-related stock prices are further adjusted is a short-term variable that determines not only foreigners’ additional selling of domestic stocks but also further weakening of the won.”
The explanation is that the weakness of the won was largely influenced by the sluggish domestic stock market rather than the strength of the dollar itself.
Although the dollar strengthened due to the results of the U.S. midterm elections and good employment indicators, the extent of the dollar's strength was limited as concerns about President Trump's lame duck came to the fore.
On the other hand, in Korea, concerns about a decline in AI investment led to a sharp decline in the stock market and net selling by foreigners, putting a more direct burden on the won.
iM Securities believes that the short-term direction of the won depends on AI-related stocks and foreign supply and demand. If the correction continues centered on U.S. semiconductor stocks, foreigners may sell domestic stocks and the won may weaken as the preference for safe assets strengthens.
However, as the domestic stock market has already fallen significantly, it was believed that if stock prices rebound, the won may also strengthen.
Economist Park said, “Considering that domestic stock prices have already undergone a significant correction, we expect that the won will also strengthen along with the stock price rebound.”
iM Securities predicted this week's won/dollar exchange rate to be in the range of 1,330 to 1,380 won.
What to Watch
AI outlook — possibilities, not facts
When domestic stock prices rebound, the won is likely to strengthen as well.
Possible · Within weeks
If the correction in U.S. semiconductor stocks continues, foreigners' selling of domestic stocks and the won's weakness may continue.
Possible · Within weeks
Open Questions
- How long will the correction in US semiconductor stocks last?
- How long will foreigners' selling of domestic stocks last?
- Specific conditions for the Korean won to strengthen
