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Kospi plunges more than 5 percent due to U.S. tariff concerns

입력 2025.04.08 17:48

Kim Ji-hwan

The Kospi, Kosdaq, and the won-dollar exchange rate are seen on an electronic board at Hana Bank in Seoul on April 7. Reporter Kim Chang-gil

The U.S. announcement of reciprocal tariffs has sent financial markets around the world into a panic as fears of a global recession grow. The Kospi and Kosdaq plunged more than 5 percent, triggering the worst panic selling since “Black Monday” in August last year. Foreigners sold more than 3 trillion won from the Korean stock market. The won-dollar exchange rate also rose by more than 33 won in a single day. Uncertainty surrounding U.S. tariff policies is expected to continue, leading to volatility in the Korean financial market for the foreseeable future.

According to the Korea Exchange (KRX), the benchmark Kospi closed at 2328.20 on April 7, down 137.22 points (5.57 percent), from the previous trading day. The index fell 106.17 points (4.31 percent) to 2359.25 and continued to plunge by 4 to 5 percent. The intraday low of 2327.01 was the lowest in one year and five months since November 1, 2023 (2288.64).

A sidecar was triggered earlier in the day at 9:12 a.m. when the Kospi 200 Futures Index fell more than 5 percent for more than a minute. It was the first time a sidecar was triggered in eight months since August 5 last year.

Foreigners were the biggest drag on the index. Foreign investors sold a net 2.9 trillion won. They also sold 187.5 billion won in the Kosdaq market. Including the Kospi 200 Futures market, foreigners were net sellers of more than 3 trillion won on that day. This is the largest net selling in more than four years and eight months since August 13, 2021.

The Kosdaq closed at 651.30, down 36.09 points (5.25 percent), from the previous session, which is the lowest this year.

Asian stock markets also fell across the board. Japan's Nikkei 225 plunged 7.83 percent, Taiwan's TAIEX plunged 9.7 percent, and China's SSE Composite Index plunged 7.34 percent from the previous trading day.

The foreign exchange market was also turbulent. In the Seoul Foreign Exchange Market, the won-dollar exchange rate rose 33.7 won from the previous trading day to 1,467.8 won per dollar (the closing price of weekly trading). The rise was the largest in more than five years since the coronavirus pandemic.

The value of the yen, a safe asset, soared. The won-yen arbitrage rate rose 26.39 won to 1,008.21 won per 100 yen, surpassing 1,000 won for the first time in two years since April 27, 2023.

“Despite the market plunge, U.S. President Donald Trump and key figures in the White House maintained a hardline stance on imposing tariffs,” said Lee Kyung-min, a researcher at Daishin Securities, adding, “Expectations have been undermined that the government will shift its policies to defend against the market decline if stock prices drop.”

The government held an emergency meeting to inspect the financial situation on the same day and said it is preparing a 100 trillion won market stabilization fund in preparation for the impact of U.S. tariffs. At the same time, it asked financial firms to provide timely funding in case the financial market and the real economy falter. The government will soon announce the policy fund support of trillions of won for the automobile industry, which is expected to be hit hard by the U.S. tariff policies.

※This article has undergone review by a professional translator after being translated by an AI translation tool.