S. Korean won plunges on stock setbacks

SEOUL, Dec. 2 (Yonhap) -- South Korea's currency fell sharply against the U.S. dollar on Tuesday mainly due to massive sell-offs on the local bourse, triggered by overnight setbacks on Wall Street, analysts said.

The local currency was trading at 1,468.75 won to the greenback as of 9:26 a.m.,
down 28.75 won from Monday's close. The decline comes after a five-day winning
streak, which sent the won up 73 won since Nov. 25.
The weak start is attributed to sharp losses in local stocks. The local benchmark
KOSPI traded 4.16 percent down. Foreign selling drove the market lower, taking a
cue from one of the worst days on Wall Street Monday which drove the Dow Jones
industrial average down 7.7 percent.
Market volatility mounted on growing concerns that the protracted financial
turmoil is spilling over into the real parts of the economy at home and abroad. A
shortage of dollars here is adding to exporters and financial institutions
troubles in servicing debts and paying for their business activities.
Earlier, the Bank of Korea (BOK), the nation's central bank, said that the gross
domestic product expanded 0.5 percent in the third quarter from three month
earlier, the slowest in four years. It is lower than the BOK's earlier estimate
of 0.6 percent.
Exports, the backbone of South Korea's economy, were affected. South Korea's
November exports nosedived 18.3 percent from a year earlier, the steepest fall in
since February 2002 when they declined 20.4 percent, according to government
data.
To revive economic growth, the central bank has cut its key interest rate by 125
basis points to 4 percent since early October and will meet to review its
monetary polices on Dec. 11. Experts forecast a further reduction in borrowing
costs.