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

[Anchor]

The KOSPI jumped more than 5% today (June 15) following news of a peace 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 accumulated inflation will settle down.

Reporter Jung Jun-ho has the story.

[Reporter]

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

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

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

Samsung Electronics and SK Hynix led the market, rising over 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 fell, supported by the peace agreement and foreign net buying.

It closed the daily session at 1,511 won, down 8.7 won.

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

Because a significant portion of oil production facilities was destroyed during the war, it is inevitable that it will 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 still reach $90 by the fourth quarter of next year.

[Interview: Cho Young-moo, Director of NH Financial Research Institute: "It may take time for costs such as insurance premiums and freight rates to fall again, and it does not seem easy for (oil prices) to return to the 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 there is a high possibility that the energy prices that have already risen will impact inflation with a delay.

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

[Interview: Heo Jun-young, Professor of Economics at Sogang University: "With the possibility of U.S. interest rate hikes still remaining, it is unlikely that the strong dollar will disappear suddenly. Mechanical buying or selling (by foreign investors) still remains a factor."]

Given the persistent inflation concerns, 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, Graphics: Jo Su-in)
※ Please note: This article was translated by AI and may contain errors.