SKorean currency drops to record low against dollar
Updated: 2008-03-17 16:52
SEOUL -- The South Korean currency won on Monday closed at the lowest level against US dollar in 27 months amid worries over global credit crisis and the country's inflationary pressure.
The local currency closed at 1,029.20 against one US dollar, down 31.9 points from last Friday's close and was the weakest close since December12, 2005, when it finished at 1,033.7 won to one US dollar.
Meanwhile, the South Korean currency closed down 66.27 won from the previous close at 1,061.58 won to 100 yen, which was the lowest close since November 13, 2001 when it ended at 1,063.53 won against 100 yen.
Local analysts said the plunge of won was mainly due to massive selling of won as foreign investors repatriate dividends to their home countries.
Investors still see the US dollar as a safer asset although the US economy might slide into a recession, they said.
The weak won came amid South Korea's current account deficit widened to an 11-year high in January as import bills increased amid soaring oil prices. The country's consumer inflation rate reached 3.6 percent in February, exceeding the central bank's target range of 2.5 to 3.5 percent for the third straight month.
The central bank made a verbal intervention regarding the foreign exchange market on Monday.
"The pace of the won's fall versus the US dollar is somewhat fast," said Ahn Byung-chan, head of the central bank's international bureau. "The foreign exchange authorities are concerned about the won's steep depreciation and we will carefully monitor the situation."
The local currency is likely to hit as low as 1,050 won against the US dollar if the foreign exchange authorities refuse to intervene to curb the won's tumble, local economists said.
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