Electronic signboards at the trading room of Hana Bank in Seoul show the local currency closed at 1,120.4 won against the U.S. dollar on Nov. 6, 2020, down 7.8 won from the previous session’s close. (Yonhap)
SEOUL, Nov. 8 (Korea Bizwire) — Joe Biden’s election as U.S. president is likely to keep the South Korean currency strong against the U.S. greenback for a while, which will work to trigger foreign capital inflow to the local stock markets, analysts said Sunday.
The local currency closed at 1,120.4 won against the U.S. dollar Monday, up 7.8 won from the previous session’s close and the strongest in 21 months.
Analysts said Biden’s election victory could further push up the Korean won down the road, as the president-elect has supported large-scale fiscal spending and stimulus policies that would weaken the U.S. dollar.
The strong won against the greenback would re-direct the FX-sensitive global passive funds to the local markets, analysts noted.
Foreign investors had dumped 577 billion won worth of local stocks in September and another 490 billion won last month.
In the first week of November, however, they raked in a net 2.12 trillion won. On Thursday, they bought a net 1.13 trillion won, the largest daily sum since July 28.
Samsung Securities analyst Yoo Seung-min expected the strong Korean won to continue through next year.
“So far, the COVID-19 uncertainties and the Trump Administration’s (economic) unilateralism and protectionism have kept the foreign cash within the U.S. territory despite the weak dollar, but the U.S. election results will help clear such obstacles one by one,” he said.
The local stock market responded fast to the combination of a Joe Biden presidency and a Republican-dominated Senate.
Stocks related to green energy — electric and hydrogen vehicles and bio — lifted on the so-called Biden effect.
The country’s leading chemical firm LG Chem spiked 4.15 percent and 6.35 percent on Thursday and Friday, respectively, as votes turned in favor of Biden. Rechargeable battery maker Samsung SDI also surged 5.33 percent and 3.1 percent.
Bio pharmaceuticals, including Samsung Biologics, Celltrion and SK Pharmaceuticals, also rose on expectations of Biden’s support for medical health care programs.
Analysts also predicted Biden would not be able to toughen antitrust regulations against big tech firms, due to the opposition from the Republican-controlled Senate.
(Yonhap)
