The Korean won has slipped to near three-month low and may be headed for the south amid growing factors pointing to a weakening in the local currency and strengthening of the U.S. dollar.

On Thursday, the Korean currency lost 12.3 won against the dollar to close at 1,135.9 won, lowest since 1,134.0 won on July 27. The slide in the Korean currency for three consecutive days represents the dollar’s strength against other currencies and Korea’s weak economic outlook.

The dollar’s strength gained new momentum as comments from U.S. Federal Reserve members suggest the central bank is finally ready to renew tightening cycle by raising the interest rates within the year. Higher interest rates bolster the dollar upon spike in demand for the benchmark safe asset with added appeal of bigger returns.

Democratic presidential candidate Hillary Clinton making a lead in polls against her Republican rival Donald Trump, an outspoken proponent for nationalistic and protectionist agenda who has been fast losing favor with the general American public and even his party due to a series of exposes on repulsive attitude and comments towards women, also helped the greenback as investors became less uneasy about U.S. trade and foreign affairs agenda under Clinton.

Domestic factors also weighed down on the won. On Thursday, the Bank of Korea downgraded forecast for next year’s growth to 2.8 percent from previous 2.9 percent estimate. The country’s two major exporters - Samsung Electronics and Hyundai Motor - have been grappling with major recall crisis and production setbacks from lengthy strike, worsening the outlook on the export front.

Foreign investors have been cashing out on Korean bellwether stocks especially in Samsung Electronics, accelerating the weakening in the won. Experts agree there are more reasons for the won to stay depressed than strengthen for now.

By Park Yoon-ye

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]