The won has been under selling pressure due to worries over China's economic slowdown, coupled with the ongoing tension on the peninsula, which has triggered massive outflows from emerging markets.

"Fears over a slowdown in the global economy and rising inter-Korean tension are working to push up the won-dollar rate, but simmering signs of a delay in the much-coveted rate hike in the U.S. may limit the local currency's sharp tumble," Woori Futures Co. said in a research note.

China's yuan devaluations have jolted the global financial market with bets on risky assets sharply tumbling amid concerns over a slowdown in the global economy.

High-level talks between South and North Korea stretched into a third day Monday amid no clear signs of progress in defusing heightened tensions on the divided peninsula.

A key sticking point appears to be South Korea's propaganda broadcasts along the heavily fortified border.

South Korea resumed the psychological warfare tactic earlier this month for the first time in 11 years in retaliation against North Korea for a recent land mine attack that maimed two South Korean soldiers.

Foreign investors extended their sell-offs of local stocks as well, with a net selling of some 730 billion won, putting further pressure on the already weak won, as China's stock market rout sapped investor sentiment.

The Shanghai Composite Index recouped its earlier loss to close at 3,209.91 points on Monday, down 8.49 percent from the previous session's close, its largest intraday fall since 2007, after falling as much as more than 9 percent.

Weighed down by heavy foreign selling, South Korea's benchmark KOSPI shed 2.47 percent to end at 1,829.81 points, extending its loss to the sixth consecutive day.

"Foreign investors seem to be pulling their money out of Korea due to continuing instability in emerging markets," said Jun Seung-ji, an analyst at Samsung Futures Co.

The currency authorities may intervene, if the won-dollar rate dips below the 1,200-won level, to rein in the won's decline, the analyst said.

The Bank of Korea, the country's central bank, said earlier in the day that it will prepare steps to help stabilize the country's financial markets while closely monitoring the market situation. (Yonhap)