Over 3 bln USD foreign funds flow out of S. Korea on geopolitical risks: bank

Source: Xinhua| 2017-09-13 15:41:10|Editor: Zhou Xin
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SEOUL, Sept. 13 (Xinhua) -- More than three billion U.S. dollars of foreign funds flowed out of South Korea's financial market last month amid rising geopolitical risks on the Korean Peninsula, central bank data showed Wednesday.

Foreign capital worth 3.25 billion dollars flowed out of the country's stock and bond markets in August, according to the Bank of Korea (BOK).

Foreign investors sold 1.34 billion dollars of local stocks, while offloading bond holdings worth 1.91 billion dollars.

It marked the first time in nine months that foreign capital flowed out of the South Korean markets.

The foreign capital outflow was attributed to the growing geopolitical risks on the peninsula, caused by Pyongyang's ballistic missile launches.

The Democratic People's Republic of Korea (DPRK) tested what it claimed was an intercontinental ballistic missile (ICBM) twice in July, and flew an intermediate-range ballistic missile (IRBM) over Japan in late August.

The DPRK's threat to strike the U.S. Pacific island of Guam also escalated geopolitical uncertainties.

Premium for South Korea's five-year credit default swap averaged 62 basis points in August, up 4 basis points from the previous month. The higher the premium, the riskier the country's debt-servicing capability was.

During the Sept. 1-Sept. 11 period, the average CDS premium picked up to 68 basis points after the DPRK's sixth nuclear test on Sept. 3.

The won/dollar exchange rate stood at 1,127.8 won per dollar as of end-August, up 8.8 won from a month earlier. It indicated the South Korean currency's depreciation versus the greenback.