|
|
|
(2nd LD) S. Korean won drops almost 5 pct against dollar
SEOUL, Oct. 8 (Yonhap) -- The South Korean won plunged almost 5 percent to a near 10-year low against the U.S. dollar Wednesday on concerns that local banks and importers face an acute shortage of dollar liquidity.
The local currency closed at 1,395.00 won against the greenback, down 66.90 won from the previous session's close and the weakest level since September 1998. At one point, it fell as low as 1,399.00 won. It was the fourth consecutive session of decline.
"Dollar demand is still strong and the currency movement is volatile," said Kwon Woo-hyun, a currency dealer at Woori Bank.
The global credit crunch is forcing local banks and companies to meet their dollar needs, he said.
Dealers said the South Korean won, which has already lost more than 30 percent so far this year, may breach the 1,400-won mark this week as a global credit crisis dampens exports and a slumping stock market accelerates capital flight
Jun Seung-ji, a currency strategist at Samsung Futures Co., said despite a series of market stabilization measures, investors are panicking and are concerned that a financial rout will affect the real economy.
"A crash in the global stock market and concerns over the credit crunch are stoking strong demand for the dollar," he said. "The won will breach the 1,400 level sometime soon."
Deepening turbulence in global financial markets will also prompt investors to steer clear of emerging-market assets, experts said.
The KOSPI, the country's key stock index, dropped more than 5 percent Wednesday, slipping below 1,300 for the first time since August 2006 as foreign investors continued to sell off local shares.
The Dow Jones industrial average sank 5.11 percent to close at 9,447.11 on Tuesday.
Experts also said that increased concerns over an economic slowdown, coupled with the increased current account deficit, will continue to prod market participants to scramble towards dollar buying.
On Tuesday, Finance Minister Kang Man-soo said that global financial turmoil is beginning to hurt the economy. The finance ministry also said on the same day that global financial woes may cause the country's economic growth for the year to fall short of its yearly target of 4.7 percent.
South Korea may post a $6 billion trade deficit in 2008, Knowledge Economy Minister Lee Youn-ho said Monday. The shortfall amounted to $14.2 billion for the first nine months of this year.
South Korea's currency market has been suffering from a dollar shortage as banks and companies are rushing to the safer greenback on concerns over a financial crisis, which was tipped off by the collapse of investment giant Lehman Brothers Holdings Inc.
sam@yna.co.kr
(END)
|
| |
|
|
Home
