Foreign investors have been on a buying spree of South Korean stocks so far this month, picking up a net 2.2 trillion won ($1.97 billion) worth of local shares, reversing their selling trend earlier this year.

Offshore investors have been net buyers of local shares for five straight sessions -- the first time this year -- from April 1 to 7, while retail investors have sold a net 1.2 trillion won over the cited period and institutions have offloaded a net 1 trillion won, according to financial industry sources Wednesday.

The recent buying spree is a change from earlier this year when offshore investors were net sellers in January, February and March.

Analysts say that foreign investors have recently picked up local shares amid weakness in the US dollar and lower interest rates.

While the local currency was trading at 1,130 won to the US dollar last month, it has since risen, closing at 1,116.3 won on Wednesday. The US 10-year Treasury yield, which had previously been on a rising trend, has also recently fallen to the 1.6 percent level.

"There has been surprising economic and manufacturing data from the United States since last week. However, interest rates and the US dollar have not risen and instead moved in the opposite direction," Samsung Securities analyst Jeong Myeong-ji said. "Foreigners are being drawn (to the local stock market) as concerns of belt-tightening measures subside and on expectations that a strong dollar has reached its threshold."

Analysts add that offshore investors' recent appetite for local shares could help the KOSPI reach new heights.

The key index rose above the 2,600-point level for the first time ever in November last year on the back of foreign buying, which reached a net 5 trillion won that month.

This month, the KOSPI has risen in all five sessions thanks to foreign buying, breaking the 3,100-point threshold and closing at 3,137.41 points Wednesday.

Foreign investors have been swooping up large cap stocks this month, including 1.1 trillion won worth of shares in market kingpin Samsung Electronics, 394.5 billion won worth of SK hynix and 333.7 billion won worth of Kakao. (Yonhap)