Won surges on global efforts, stock rallies

(ATTN: MODIFIES headline, lead; ADDS analyst comments, details from 4th para)
SEOUL, Oct. 13 (Yonhap) -- The South Korean won jumped against the U.S. dollar
late Monday morning as investor expectations rose that global efforts to tackle
financial turmoil might help increase liquidity in the local market, dealers
said.
The won was trading at 1,273.05 won to the greenback as of 11:01 a.m., up 35.95
won from Friday's close. It soared to as high as 1,226 won at one point.
Stock rallies added to the won's upward move. The KOSPI, the country's key stock
index, opened over 4 percent higher, prompting the bourse operator to suspend the
program trading temporarily to cool the market.
"Joint efforts by global leaders to stave off a crisis and measures taken against
speculative forces in currency markets contributed to boosting the won's value,"
said Hong Seung-mo, a dealer at Shinhan Bank. "Investors seemed to be afraid of a
possible steep fall of the won-dollar exchange rate."
Dollar selling also intensified as investors dumped the greenback on worries that
the government might intervene in the market to support the sliding currency,
dealers said. The won has lost nearly 30 percent since the start of this year.
A recent global credit crunch that started in the United States has created a
dollar liquidity shortage for local banks and importers, further fanning demand
for the greenback.
Experts said that increased concerns over an economic slowdown may however
continue to prod market participants to scramble to buy dollars.
Global action has been swift with central banks of major countries slashing their
key interest rates to block the evolving financial crisis from cascading into
their real economies.
After a meeting in Washington late last week, financial leaders from the Group of
Seven advanced countries issued a statement under which they agreed that the
current situation calls for urgent and exceptional action and pledged to take
"all necessary steps" to unfreeze credit and money markets.
Officials here are also rushing to resolve the currency shortage.
The Finance Ministry recently announced that it will inject a total of US$10
billion into the nation's won-dollar swap market to provide liquidity amid
tightening credit conditions. The government has spent almost $25 billion since
March to support the won.
Attending the annual meetings of the International Monetary Fund and the World
Bank in Washington, Finance Minister Kang Man-soo urged advanced nations Saturday
to expand their currency swap programs to emerging markets including South Korea,
aimed at providing more liquidity to the local market.