Bank of Korea says foreign securities investment outflows widened in September

The Bank of Korea said Friday that foreign net outflows from Korean securities widened to $19.97 billion in September, extending a run of net selling that began in February and marking an eighth consecutive month of outflows. The September figure was larger than August's $4.5 billion in outflows.

The deterioration was driven by equities, which swung from $40 million of net inflows in August to $14.16 billion of net outflows. The central bank attributed the reversal to waning investment sentiment as global long-term interest rates rose and concerns mounted over a slowdown in AI-related investment. Bond funds also recorded net outflows, of $5.81 billion, which the Bank of Korea attributed to the maturity of government bonds and weak reinvestment after short-term arbitrage incentives turned negative.

External borrowing conditions for domestic banks remained broadly favorable. The spread on medium- and long-term overseas borrowing fell to 40 basis points in September from 45 basis points the previous month, while the short-term spread held at 27 basis points and the credit default swap premium at 22 basis points.

In the currency market, the won-dollar exchange rate moved in a range of 7.0 won in September, a fluctuation rate of 0.52 percent, wider than the 4.4 won and 0.31 percent recorded in August.