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The South Korean currency has depreciated against the U.S. dollar more steeply than other currencies due to soaring prices of raw materials, the country's heavy dependence on the Chinese economy and foreign investors' selling of local stocks, a central bank report showed Tuesday.
The Korean won has fallen about 9 percent in value against the dollar since early last year amid expectations that the greenback will gain strength due to the U.S. Federal Reserve's faster-than-expected tapering and rate hikes, but the Bank of Korea said the won's descent has been steeper than other currencies.
A major reason for the steeper descent is soaring prices for raw materials, which have worsened trading terms for Seoul and negatively impacted its economy.
The report also cited South Korea's growing reliance on China's economy as another reason, saying concerns over an economic slowdown there have put additional downward pressure on the won.
Foreign investors' sell-off of local stocks has also played a part in causing the won to depreciate against the dollar.
They have increased their selling of overvalued stocks here as part of their global portfolio rebalancing, causing a dollar outflow and the won's descent, the report said.
The report underlined the need for stepped-up monitoring of the forex market and global money flows, given that the won-dollar exchange rates are being affected by a combination of such diverse factors rather than just inflation woes in the U.S. (Yonhap)
