Dollar asset investments balloon as greenback softens

SEOUL, Nov. 26 (Yonhap) -- The softening U.S. dollar has drawn big investments into dollar-based funds, with more than half of this year's total deposits received in the past one month, data showed Sunday.

Some 210.7 billion won (US$193.83 million) has been invested in 44 locally operated dollar asset funds this year, with 62.5 percent, or 131.7 billion won, injected during the past one month, according to figures provided by financial market researcher FN Guide.

The greenback dipped to a 30-month low Friday, closing at 1,085.4 Korean won, despite verbal interventions by South Korean officials, citing possible short-term hoarding and the won rising at too fast of a pace.

Investors were also putting their money in repurchase agreements (RPs). Deposits in dollar RPs at Daishin Securities, for example, increased 45.6 percent to $186.78 million as of Thursday from $128.27 million at end-October.

Data showed that people who chose inverse exchange-trade funds (ETFs), portending a weakening dollar, made above-average profits over the past month. Inverse ETFs recorded 6.25 percent gains compared with 0.17 percent for dollar asset ETFs and 3.69 percent for local securities index funds.

"With the current momentum in the domestic economy and expectations of a rate hike combined, chances are high that the won-dollar exchange rate will stay under 1,100 won per greenback," Kim Dae-joon of Korea Investment & Securities said. "It's time to establish an investment strategy based on the strong won."
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