South Korean stocks closed lower Wednesday, as investor sentiment was dampened by deepening concerns over a global economic slowdown amid high inflation and the continued antivirus lockdown in China. The local currency fell sharply against the US dollar.

The Korea Composite Stock Price Index (Kospi) lost 1.10 percent, or 29.25 points, to close at 2,639.06.

Trading volume was moderate at 1.06 billion shares worth 12.40 trillion won ($9.81 billion) with decliners outstripping gainers 695 to 193.

Foreigners and institutions offloaded a net 678.7 billion won and 237.7 billion won worth of stocks, respectively, while retail investors bought a net 904.6 billion won.

The index tracked the overnight losses on Wall Street, as investors focused on the US central bank's looming aggressive monetary belt-tightening, and China's lockdown of Shanghai and other major cities over the continued spread of the COVID-19 pandemic.

"High inflation is expected to trigger faster-than-expected rate hikes, which stoke fears of an economic slowdown. China's virus curbs, coupled with the ongoing crisis surrounding Ukraine, also sparked concerns over the global supply chain disruptions," Meritz Securities analyst Lee Kyeong-soo said.

Last week, Federal Reserve chairman Jerome Powell said he sees the need to move "a little more quickly" in terms of raising interest rates to bring down inflation, and a 50 basis points hike is possible next month.

Most top-cap shares on the Seoul bourse lost ground, with tech and financials leading the fall.

Market heavyweight Samsung Electronics fell 1.66 percent to a fresh 52-week low of 65,100 won, and major chipmaker SK hynix lost 2.25 percent to 108,500 won.

Battery maker LG Energy Solution, the second most valuable company on the Kospi, declined 1.3 percent to 418,000 won as the 90-day lockup period for allotted shares from its initial public offering ended in the day. It made the stock market debut in January.

KB Financial tumbled 3.5 percent to 57,900 won, and Kakao Bank retreated 2.31 percent to 42,250 won.

But bio shares gathered ground after the incoming government vowed to nurture the sector as a future growth engine.

Samsung Biologics rose 0.75 percent to 810,000 won, and biopharmaceutical giant Celltrion advanced 1.79 percent to 171,000 won. Vaccine maker SK Bioscience jumped 2.18 percent to 140,500 won.

The local currency ended at 1,265.20 won against the US dollar, down 14.40 won from Tuesday's close.

It is the first time in more than two years that the local currency fell to the 1,260 won level.