KOSPI South Korea Seoul Composite (KOSPI)

[MistySteel]

Won Jumps 1,300 Barrier Against the Dollar

The Korean won soared W58 against the U.S. dollar on Thursday to regain the 1,200 level for the first time in four months. Large foreign purchases of Korean stocks, the March current account surplus and an extension of maturity for GM Daewoo forward exchange contracts contributed to the jump.

The won finished trading on Thursday at W1,282 against the dollar, down W58.7 compared to Wednesday, hitting the highest point since Dec. 30 of last year, when the Korean currency closed at W1,259.5. It was the first time since Jan. 7 (W1,292.5) of this year that the won finished below the W1,300 level against the dollar. It was also the largest increase in the value of the won since Oct. 30 of last year, when the Korean currency strengthened W177 following the signing of a currency swap agreement with the United States.

Not all currency pundits were convinced the trend will last. Chang Jae-chul of the Samsung Economic Research Institute said the won could strengthen to the W1,100 level in the second half of this year if the global economy recovers, but Lee Jin-woo of NH Futures said the won's direction is heavily contingent on the stock market and could weaken to the W1,300 level once the KOSPI turns bearish again.
[e-mail] / May 01, 2009 11:05 KST

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