ID :
33596
Tue, 12/02/2008 - 18:29
Auther :
Shortlink :
http://m.oananews.org//node/33596
The shortlink copeid
S. Korean won plunges on stock setbacks
(ATTN: UPDATES with closing prices in first 3 paras; ADDS analyst comments, details from 4th para)
SEOUL, Dec. 2 (Yonhap) -- South Korea's currency plunged 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 won finished at 1,464.5 won to the greenback, down 24.5 won from Monday's
close, after falling as low as 1,483 won in early trading.
The decline comes after five days of gains, which saw the currency climb 73 won
against the dollar since Nov. 25. The won has lost 36 percent against the dollar
so far this year.
"Stock pullbacks coupled with a lingering risk-averse market mood put downward
pressure on the won's value," said Jeon Seung-ji, a currency analyst at Samsung
Futures. "The losses were slightly pared later thanks to inflows of dollars from
exporters and the government."
The benchmark KOSPI stock index fell 3.35 percent to 1,023.2 points, taking a cue
Wall Street, which had one of its worst days on Monday. The Dow Jones industrial
average dropped 7.7 percent.
Jeon said that a shortage of dollars is also adding to the downward move by
making it tough for banks and exporters to service debts and pay for their
business activities, despite the government efforts to pump money into the
financial system.
The Bank of Korea, the nation's central bank, earlier said it has supplied $4
billion borrowed from its U.S. counterpart to help dollar-starved local banks
under a currency swap deal reached in late October.
Market volatility worsened on growing concerns that the protracted financial
turmoil is spilling over into the real economy at home and abroad.
The BOK said that gross domestic product expanded 0.5 percent in the third
quarter from three months earlier, the slowest in four years and lower than an
earlier estimate of 0.6 percent.
South Korea expects its economy to grow around 4 percent next year, much higher
than projections by major think tanks and investment groups. Switzerland-based
UBS predicted a contraction. If that forecast is correct, it would be the first
time in 11 years the South Korean economy has contracted.
The financial turmoil is taking a toll on exports, the backbone of South Korea's
economy, by reducing overseas demand for Korean-made goods. The nation's November
exports nosedived 18.3 percent from a year earlier, the steepest fall in nearly
seven years.
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.
"A rate decision will not likely have a significant impact on the foreign
exchange market as interest rate reductions are in line with global efforts to
fight a recession," Jeon said. "A collapse of the struggling major automakers in
the U.S could have much more influence on the won's future direction as it could
rattle the overall global financial markets from the ground."
kokobj@yna.co.kr
(END)
SEOUL, Dec. 2 (Yonhap) -- South Korea's currency plunged 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 won finished at 1,464.5 won to the greenback, down 24.5 won from Monday's
close, after falling as low as 1,483 won in early trading.
The decline comes after five days of gains, which saw the currency climb 73 won
against the dollar since Nov. 25. The won has lost 36 percent against the dollar
so far this year.
"Stock pullbacks coupled with a lingering risk-averse market mood put downward
pressure on the won's value," said Jeon Seung-ji, a currency analyst at Samsung
Futures. "The losses were slightly pared later thanks to inflows of dollars from
exporters and the government."
The benchmark KOSPI stock index fell 3.35 percent to 1,023.2 points, taking a cue
Wall Street, which had one of its worst days on Monday. The Dow Jones industrial
average dropped 7.7 percent.
Jeon said that a shortage of dollars is also adding to the downward move by
making it tough for banks and exporters to service debts and pay for their
business activities, despite the government efforts to pump money into the
financial system.
The Bank of Korea, the nation's central bank, earlier said it has supplied $4
billion borrowed from its U.S. counterpart to help dollar-starved local banks
under a currency swap deal reached in late October.
Market volatility worsened on growing concerns that the protracted financial
turmoil is spilling over into the real economy at home and abroad.
The BOK said that gross domestic product expanded 0.5 percent in the third
quarter from three months earlier, the slowest in four years and lower than an
earlier estimate of 0.6 percent.
South Korea expects its economy to grow around 4 percent next year, much higher
than projections by major think tanks and investment groups. Switzerland-based
UBS predicted a contraction. If that forecast is correct, it would be the first
time in 11 years the South Korean economy has contracted.
The financial turmoil is taking a toll on exports, the backbone of South Korea's
economy, by reducing overseas demand for Korean-made goods. The nation's November
exports nosedived 18.3 percent from a year earlier, the steepest fall in nearly
seven years.
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.
"A rate decision will not likely have a significant impact on the foreign
exchange market as interest rate reductions are in line with global efforts to
fight a recession," Jeon said. "A collapse of the struggling major automakers in
the U.S could have much more influence on the won's future direction as it could
rattle the overall global financial markets from the ground."
kokobj@yna.co.kr
(END)
