As the South Korean won continues to strengthen against the U.S. dollar, market analysts believe international investors are likely to maintain aggressive buying of Korean equities for the time being.

Since June, foreign investors have net buying of over $3.8 billion in shares on the Korean stock market and the won has also appreciated about 2.4 percent during the same period as the won-dollar rate fell to a five-month low last week.

“The trend of appreciating currency due to active foreign buying can also be seen in Taiwan where the local currency there has gained 1 percent against the dollar as overseas investors made a net buying of $3.4 billion in Taiwanese stocks,” Kang Hyun-chul, an analyst at LG Investment & Securities, said.

He believed there was a high correlation between the trading pattern of foreign investors and the movement of currency.

“The period of the won’s appreciation coincides with when foreign investors stepped up their buying of Korean stocks. Although it is difficult to say that net buying of overseas investors has strengthened the won, it is safe to say that the won’s appreciation will have an impact on the buying trend of foreigners,” Kang said.

“Therefore investors should also keep an eye on the volatility of the local currency as it could exert both direct and indirect influence on overseas investors,” he added.

Meanwhile, the securities firm said that the fast inflow of capital into U.S. mutual funds since April was also buoying foreign investors, especially in the emerging markets in the Asia-Pacific region.

“In contrast to the capital inflow into international and global equity funds, the emerging market funds have seen a net inflow for the last five straight weeks, giving overseas investors plenty of liquidity,” the local brokerage house said.