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Kospi plunges 3 percent, won hits lowest since 2008 as Korea lifts its short selling ban

Published: 31 Mar. 2025, 16:37

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,481.12 points on March 31, down 76.86 points, or 3 percent, from the previous trading session. [YONHAP]

Korea's currency weakened markedly against the dollar on Monday to reach the lowest level in around 16 years amid growing concerns about the impact of the Donald Trump administration's sweeping tariff plans and the resumption of short selling.

The won was quoted at 1,472.9 won against the greenback at 3:30 p.m., up 6.4 won from the previous session.

The reading marks the lowest level since March 13, 2009, when the won was quoted at 1,483.5 won in the aftermath of the 2008 financial crisis.

The local currency has stayed near the 1,450-won level since December amid U.S. tariff warnings and a domestic political crisis sparked by President Yoon Suk Yeol's martial law imposition.

Washington is set to announce reciprocal tariffs on Wednesday and has emphasized that all countries will be targeted.

“In addition to the tariff issues, investors were wary of the possibility of stagflation in the United States, where economic growth slows while inflation stays high. The resumption of stock short selling also heightened investors' risk-aversion sentiment,” said Lee Min-hyuk, an expert from KB Kookmin Bank.

Short selling resumed Monday, allowing investors to sell borrowed shares of listed firms in Seoul. The practice had been banned since November 2023. The lifting of the ban is expected to fuel short-term volatility but boost overall liquidity in the long term.

Shares fell 3 percent to a near two-month low following the removal of the short selling ban and impending tariff announcement from the United States.

The Kospi dropped 76.86 points to close at 2,481.12, marking the lowest closing since Feb. 3, when it finished at 2,453.95.

Trade volume was slim at 385.5 million shares worth 8.1 trillion won ($5.5 billion), with losers sharply outnumbering winners 824 to 87.
Foreigners sold a net 1.5 trillion won worth of stocks, while institutions and individuals purchased a net 666.9 billion won and 789.9 billion won, respectively.

Analysts said investors were concerned that U.S. President Donald Trump's reciprocal tariffs would trigger a global trade war. He also confirmed that 25 percent tariffs on all imported cars would take effect Thursday.

Most shares suffered a sharp decline.

Samsung Electronics sank 3.99 percent to 57,800 won, and its chipmaking rival SK hynix tumbled 4.32 percent to 190,700 won.
Carmakers were among the biggest losers as industry leader Hyundai Motor slumped 3.8 percent to 197,200 won, and Hyundai Mobis, an auto parts-making affiliate under Hyundai Motor Group, slid 2.62 percent to 260,500 won.

Battery makers also went south as LG Energy Solution plunged 6.04 percent to 334,500 won, and Posco Future M plummeted 6.38 percent to 120,300 won.

Celltrion lost 4.57 percent to 169,000 won, and cosmetics firm Amorepacific skidded 2.97 percent to 101,400 won.

Bond prices, which move inversely to yields, ended higher. The yield on three-year government bonds fell 6.7 basis points to 2.569 percent, and the return on the benchmark 10-year U.S. government bonds dropped 12.7 basis points to 4.235 percent.

Yonhap