The won and foreign flows: how USD/KRW moves with foreign buying
Updated September 2026 · Data January 2006 – August 2026
For anyone investing in Korea from abroad, the return has two parts: what the stock does in won, and what the won does against your currency. The two are not independent. Foreign investors who sell Korean stocks convert the proceeds out of won, and a weakening won makes foreigners less willing to hold Korean assets — a loop that shows up clearly in the data. This guide measures the link using 248 months of foreign net purchases and the USD/KRW exchange rate.
The same-month relationship
From January 2006 to August 2026, the correlation between monthly net foreign purchases of KOSPI stocks and the monthly change in USD/KRW was −0.21: more foreign buying, stronger won (a lower dollar-won rate). Put in plainer terms:
- In months when foreigners were net buyers, the won strengthened 64% of the time.
- In months when they were net sellers, the won weakened 65% of the time.
- In the 55 months of heavy buying (more than ₩2 trillion), the dollar fell 1.1% against the won on average. In the 63 months of heavy selling (more than ₩2 trillion), it rose 1.4%. The average across all months was close to zero.
Like the link between foreign flows and the KOSPI itself (see Do foreign investors move the KOSPI? ), this is a same-month relationship. Last month's flow has no measurable relationship with this month's exchange rate (correlation 0.07), and last month's exchange-rate move does not predict this month's flow (−0.02). Flows and the won move together; neither leads.
Crisis episodes
The loop is most visible at extremes. Every major won sell-off of the last two decades coincided with heavy foreign selling of stocks, and several won peaks marked the month foreigners turned back into buyers.
| Month | USD/KRW high | Foreign flow (₩ tn) | Context |
|---|---|---|---|
| Nov 2008 | 1,513 | −1.6 | Financial crisis |
| Mar 2009 | 1,570 | +1.1 | Record won low; foreigners turn buyers |
| Mar 2020 | 1,286 | −12.5 | Pandemic |
| Oct 2022 | 1,440 | +3.3 | Fed tightening peak |
| Dec 2024 | 1,473 | −3.0 | Martial-law crisis |
| Apr 2025 | 1,484 | −9.6 | US tariff shock |
| May 2026 | 1,517 | −51.5 | Record foreign selling begins |
| Jun 2026 | 1,549 | −58.8 | Record selling month |
| Jul 2026 | 1,556 | −8.6 | Won peaks 2 Jul, then rallies |
| Aug 2026 | 1,433 | −9.9 | Won recovers to 1,369 |
Monthly high of the Seoul closing rate; foreign net purchases of KOSPI common and preferred shares.
2026 is the extreme case. Foreigners sold a combined ₩110 trillion of KOSPI stocks in May and June, and USD/KRW rose from the mid-1,400s to 1,556 on 2 July — the weakest won since March 2009. What happened next is a useful reminder that correlation is not destiny: the won then rallied to 1,369 by the end of August even though foreigners kept selling (₩8.6 trillion in July, ₩9.9 trillion in August). Exporter dollar sales, official intervention and the reversal of Korean households' own flows into US assets can all overwhelm portfolio flows for a time.
Why it matters for a dollar investor
The practical consequence is that a foreign-led sell-off hits a dollar-based investor twice. In 2022 the KOSPI fell 25% and the won lost 6% against the dollar, so the dollar return was closer to −29%. The reverse also holds: in 2009 the index gained 50% and the won recovered 8% from its year-end 2008 level. And in 2026 to date the won's 5% gain has added to the index's 56% rise for a dollar investor, despite record foreign selling — because the buyers were domestic and the won's drivers were broader than portfolio flows.
| Year | USD/KRW year-end | High | Foreign flow (₩ tn) | KOSPI |
|---|---|---|---|---|
| 2008 | 1,260 | 1,513 | −28.5 | −40.7% |
| 2009 | 1,165 | 1,570 | +29.2 | +49.7% |
| 2012 | 1,071 | 1,186 | +17.0 | +9.4% |
| 2017 | 1,071 | 1,208 | +7.3 | +21.8% |
| 2020 | 1,086 | 1,286 | −24.2 | +30.8% |
| 2022 | 1,265 | 1,440 | −6.9 | −24.9% |
| 2023 | 1,288 | 1,364 | +11.2 | +18.7% |
| 2024 | 1,473 | 1,473 | +1.5 | −9.6% |
| 2025 | 1,439 | 1,484 | −9.4 | +75.6% |
| 2026* | 1,369 | 1,556 | −199.2 | +55.7% |
* 2026 as of 2 September. Selected years.
How to use the two series together
- Confirmation, not prediction. Foreign selling plus a weakening won is a stress regime; foreign buying plus a strengthening won is the benign one. Neither tells you when the regime changes.
- Watch for divergence. A won that stops weakening while foreigners are still selling (July–August 2026) means other flows have taken over. Historically those divergences resolved with the flow data catching up to the currency rather than the reverse, but the sample is small.
- Hedging changes the calculus. A currency hedged position removes the second hit but also the offset when the won recovers. Over the full 2006–2026 period the won lost about a quarter of its value against the dollar (USD/KRW from roughly 1,010 to 1,369), with most of the move in 2008 and 2022–24.
- Use the daily total. The flow rankings page shows the day's market-wide foreign net purchase in both won and dollars, so the two can be read side by side.
Exchange rates are Seoul market closing rates. Flow figures are from Korea Exchange investor statistics as processed by our pipeline and include the NXT venue since March 2025. This article is general information, not investment advice.