S. Korean currency rises against U.S. dollar on U.S. bailout hopes

SEOUL, Oct. 1 (Yonhap) -- The South Korean currency rose against the U.S. dollar
on Wednesday from a 64-month low on revived hopes that U.S. lawmakers will
salvage a rejected bailout plan for the troubled financial sector, dealers said.

The local currency was trading at 1,189.75 won as of 10:34 a.m., up 17.25 won
from the previous session's close. The won plunged to 1,207 won against the
dollar on Tuesday, with its total value declining about 22 percent so far this
year. A weaker won puts upward pressure on already-high inflation.
The U.S. Senate agreed to a vote on Wednesday night on the US$700 billion bailout
plan, which eased investor's rush to the greenback, dealers said.
On Monday, the U.S. House of Representatives turned down the government-led
US$700 billion emergency rescue proposal designed to buy bad debts from financial
institutions. The decision sent shock waves across the globe, raising fears that
instability in the financial sector could cascade into the real economy.
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 sparked by the collapse of investment giant Lehman Brothers Holdings Inc.
A widening shortfall of the current account, coupled with rising overseas debt
and a selling spree of local stocks by foreign investors, is putting downward
pressure on the already-weakening local currency.