KOSPI Tumbles for Second Consecutive Day

With jitters spreading across financial markets at home and abroad, Korea’s stock prices and currency plunged again yesterday. In particular, as demand for the Japanese yen soars on concerns over the potential liquidation of the “yen-carry trade,” the won-yen exchange rate rose to its highest level in 15 months.

The benchmark KOSPI index closed at 1,638.07 yesterday, dropping by 53.91 points (3.19 percent) from the previous day due to sinking Asian stock markets, including Japan. The day’s drop was the third consecutive day the index fell. The KOSDAQ index ended 15.59 points (2.26 percent) lower than the previous day at 673.48.

Japan’s Nikkei 225 average stock price dropped 874.81 yen (5.42 percent) from the previous day to 15,273.68, its steepest decline in seven years and four months. The won-yen exchange rate closed 30.13 higher to 844.57 won per 100 yen, the highest figure since the 848.91 won mark on May 23, 2006. It was the largest increase in seven years and 11 months after the 30.59 won increase in the rate on September 21, 1999.

The won-dollar exchange rate also went up 4.1 won, closing at 950.4, the highest level in five months.

The government will consider market intervention using its foreign currency reserve if the value of the won drops under a certain level.

A high-ranking government official said, “As domestic financial institutions and companies are having difficulties borrowing foreign currencies in the international financial market, the government is carefully watching to see if they will face a credit crunch.”