S. Korean won jumps 2.5 pct against U.S. dollar

SEOUL, Dec. 11 (Yonhap) -- South Korea's currency jumped 2.5 percent against the
U.S. dollar Thursday as foreign investors and exporters unloaded the greenback on
eased jitters over market instability, analysts said.
The local currency closed up 35.3 won from Wednesday at 1,358.5 won, the highest
level in a month, marking the fifth straight session of advance. At one point, it
soared as high as 1,330 won.
"Market sentiment seemed to have improved as foreign investors bought more than
they sold in the bourse for a fourth straight day, raising hopes that a massive
exodus of foreign capital might be coming to an end," said Shin Jin-ho, a
currency analyst at Woori Futures.
"Exporters also started to unload the greenback earned from trading as they think
that the won has finally hit bottom," he added.
The stock markets closed higher for a fifth straight session, bolstered by the
central bank's sharper-than-expected rate cut, with the benchmark KOSPI stock
index rising 0.75 percent to 1,154.43.
Earlier in the day, the Bank of Korea reduced the benchmark interest rate by an
unprecedented 1 percentage point to 3 percent. It has trimmed the rate by a
combined 2.25 percentage points from 5.25 percent since early October in an
effort to keep global financial turmoil from impacting the real economy.
Currency and stock markets are gaining stability as concerted efforts by the
government and the central bank to inject more liquidity are paying off in
improving market sentiment, observers say.
The BOK has injected a total of US$7 billion into the local financial system by
using a currency swap line with the Federal Reserve, supplying dollars for
cash-strapped banks and exporters, experts said.
Expectations are growing that South Korea could "sooner or later" obtain an
additional swap line with other Asian countries, which will help provide more
room for the government to inject liquidity into the system without depleting the
nation's foreign reserves holdings.
South Korea, China and Japan will hold three-way summit talks in the Japanese
city of Fukuoka on Saturday, where they are expected to decide on how much they
will expand existing currency swap lines. Japanese media said earlier that South
Korea and Japan will likely double their bilateral swap line to $30 billion.
"The market consensus is that dollar demand is declining after hitting its peak,
while the dollar supply line is getting bigger and bigger. For the time being,
the won's value is expected to continue to stay strong," Shin said.
kokobj@yna.co.kr
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