KOSPI Surges 5.2% on News of End to War; Inflationary Pressures Persist

[Anchor]

The KOSPI jumped more than 5% today (June 15) following news of a ceasefire agreement between the United States and Iran. International oil prices and the exchange rate both fell, showing signs of stabilization. However, experts suggest that it remains to be seen when the elevated inflation will truly settle down.

Reporter Jung Jun-ho has the story.

[Reporter]

The KOSPI surged immediately upon opening, triggering a "buy sidecar" just six minutes into the trading session.

Investor sentiment improved following the news of the U.S.-Iran ceasefire, and foreign investors continued their net buying for the second consecutive trading day, pushing the index higher.

The KOSPI closed at 8,545, up 5.2% from last Friday.

Samsung Electronics and SK Hynix led the market, rising more than 4% and 6% respectively. Airline stocks, including Korean Air and Jeju Air, recorded double-digit gains as international oil prices fell to the low $80 range per barrel.

The won-dollar exchange rate also declined, supported by the ceasefire news and foreign net buying.

The exchange rate closed the daily session at 1,511 won, down 8.7 won.

While the decline in oil prices and the exchange rate provides some relief, concerns over inflation remain.

Because a significant portion of crude oil production facilities was destroyed during the war, it will inevitably take time for international oil prices to return to pre-war levels.

Some forecasts suggest that oil prices could remain at $85 in the second quarter and stay as high as $90 by the fourth quarter of next year.

[Cho Young-moo / Director, NH Financial Research Institute: It may take time for costs such as insurance premiums or freight rates to fall again, and it does not seem easy for oil prices to return to levels seen before the Iran war.]

Furthermore, there is a time lag before the drop in international oil prices is reflected in domestic fuel prices, and the energy costs that have already risen are highly likely to impact inflation with a delay.

Even though the exchange rate has fallen, it remains at a high level, which, along with oil prices, could continue to act as a source of upward pressure on inflation.

[Heo Jun-young / Professor of Economics, Sogang University: With the possibility of U.S. interest rate hikes still remaining, it does not seem like the strong dollar will disappear suddenly. The mechanical buying or selling by foreign investors is still a factor.]

Given the persistent concerns over inflation, experts predict that the Bank of Korea will proceed with interest rate hikes in the second half of this year as previously signaled.

(Video Editing: Jung Yong-hwa, Design: Jo Su-in)
※ Please note: This article was translated by AI and may contain errors.