Skip to content
  • KOSPI 2634.25 +42.91 +1.66%
  • KOSDAQ 891.29 +5.18 +0.58%
  • KRX100 5636.08 +111.77 +2.02%
  • USD/KRW 1104.9 0.50 0.05%
  • JPY100/KRW 1,058.74 -2.83 -0.27%
  • EUR/KRW 1,318.31 -3.27 -0.25%
  • CNH/KRW 168.03 0.01 0.01%
Visit Market Data
Markets

Korean won off 29-month high on government warning

Nov 19, 2020 (Gmt+09:00)

The South Korean won suffered its biggest daily loss in five months against the dollar on Nov. 19, after Finance Minister Hong Nam-ki stepped up warnings against the won's recent advance to a 29-month high.
 
The won has been the best performer among major currencies in the past two months, with the country’s main stock market Kospi climbing 12% since late August on the improved outlook for the global economy and corporate earnings.

The won ended domestic trade at 1,115.6 per dollar, marking its biggest one-day loss since it shed 12.2 won to the dollar on June 15. 

This compares to Wednesday’s finish at 1,103.8, its strongest close since strengthening to 1,097.7 on June 15, 2018.


After opening at 1,107.0, the Korean currency weakened to 1,116.1, in response to Hong’s remarks.

“Concerns are deepening about the continued decline in the dollar-won rate among our economic entities,” the finance minister told an economic policy coordination meeting, about 20 minutes before the market's open.

“Excessive foreign exchange fluctuations are not desirable at all. We will aggressively respond to market fluctuations whenever needed,” Hong said. 

The won got a boost from the yuan's bullish run, despite the recent rise in coronavirus cases in South Korea. Robust economic data and corporate earnings in the third quarter drove the won further higher. 

South Korea’s current account surplus rose in September to its highest level in two years on rebounding exports of chips and automobiles. Manufacturers' shipments expanded by their biggest margin in 23 months in September, up 7.5% from the month before.

After the US presidential election, the foreign exchange market also expected President-elect Biden’s economic policy, promoting a huge stimulus package, to provide a tailwind for the won.

“Market views about the dollar are mixed between expectations about COVID-19 vaccines and concerns about the respreading pandemic,” said Kiwoom Securities analyst Kim Yoomi. “Given the authorities’ warning, the dollar-won rate is very likely to rise slightly more.”

Meanwhile, the weaker dollar encouraged South Korean companies and households to accumulate their dollar holdings in anticipation of converting them on the dollar's rebound. The balance of dollar deposits soared by $6.85 billion in October alone to hit a record $80.3 billion, the Bank of Korea said on Nov. 18.

Write to Ik-hwan Kim at lovepen@hankyung.com

Yeonhee Kim edited this article.

Comment 0

0/300