ID :
124410
Wed, 05/26/2010 - 15:22
Auther :
Shortlink :
https://oananews.org//node/124410
The shortlink copeid
(News Focus) Europe woes, N. Korea risks to put downward pressure on Korean won:
By Kim Soo-yeon
SEOUL, May 26 (Yonhap) -- Heightened geopolitical risks from the deadly sinking
of a South Korean warship by North Korea, coupled with the European debt crisis,
are widely expected to put downward pressure on the local currency for some time,
analysts said Wednesday.
But they noted that over the long haul, the Korean won is forecast to bounce back
against the U.S. dollar, given the country's relatively strong economic
fundamentals.
South Korea's currency market somewhat stabilized on Wednesday after taking a
beating in the previous session when investors, spooked by escalating tension
with North Korea and nagging concerns over European fiscal problems, flocked to
safety. The local currency closed at 1,253.3 won to the greenback, down 3.3 won
from Tuesday's close, easing from a 2.84 percent tumble the previous session.
"Uncertainty surrounding the development of the two issues and market jitters
dented already-fragile investor sentiment," said Byeon Ji-young, a currency
analyst at Woori Futures Co.
Last week, Seoul accused Pyongyang of sinking one of its naval ships with a
torpedo attack in late March, killing 46 sailors. South Korea on Monday announced
it will sever inter-Korean trade and close its waters to North Korean vessels in
retaliation.
As strong rhetoric by the North amplified investors' panic, the government said
it will closely cooperate with the central bank in a bid to stabilize markets and
it is ready to take action if necessary.
"To curb market uneasiness, (the government) is closely watching the foreign
currency denominated money market and plans to supply ample foreign liquidity if
needed," Vice Finance Minister Yim Jong-ryong said at an emergency meeting
convened to ease market anxiety.
Experts said as the eurozone debt fears and geopolitical risks are not likely to
subdue easily, the Seoul currency market is expected to undergo higher volatility
for the time being.
"The government's supply of foreign currency liquidity would help ease some
stress in the market, but the stabilization of the global financial markets
should precede," said Jeon Seung-ji, a currency analyst at Samsung Futures Inc.
However, experts said the geopolitical risks would not be grave enough to make a
turnaround of the local currency's long-term rising trend to the dollar.
The Korean currency has been on the upswing versus the dollar amid the economic
recovery and the current account surplus. The local currency has climbed about 7
percent against the greenback so far this year.
"If consensus is building that a possible armed collision will not come, the
Korean currency will likely return to the upward trend to the dollar. The North
Korean issue and the European debt concerns are not seen as cutting the Korean
economy's growth momentum," said Lim Ji-won, an economist at JPMorgan Chase & Co.
sooyeon@yna.co.kr
(END)
SEOUL, May 26 (Yonhap) -- Heightened geopolitical risks from the deadly sinking
of a South Korean warship by North Korea, coupled with the European debt crisis,
are widely expected to put downward pressure on the local currency for some time,
analysts said Wednesday.
But they noted that over the long haul, the Korean won is forecast to bounce back
against the U.S. dollar, given the country's relatively strong economic
fundamentals.
South Korea's currency market somewhat stabilized on Wednesday after taking a
beating in the previous session when investors, spooked by escalating tension
with North Korea and nagging concerns over European fiscal problems, flocked to
safety. The local currency closed at 1,253.3 won to the greenback, down 3.3 won
from Tuesday's close, easing from a 2.84 percent tumble the previous session.
"Uncertainty surrounding the development of the two issues and market jitters
dented already-fragile investor sentiment," said Byeon Ji-young, a currency
analyst at Woori Futures Co.
Last week, Seoul accused Pyongyang of sinking one of its naval ships with a
torpedo attack in late March, killing 46 sailors. South Korea on Monday announced
it will sever inter-Korean trade and close its waters to North Korean vessels in
retaliation.
As strong rhetoric by the North amplified investors' panic, the government said
it will closely cooperate with the central bank in a bid to stabilize markets and
it is ready to take action if necessary.
"To curb market uneasiness, (the government) is closely watching the foreign
currency denominated money market and plans to supply ample foreign liquidity if
needed," Vice Finance Minister Yim Jong-ryong said at an emergency meeting
convened to ease market anxiety.
Experts said as the eurozone debt fears and geopolitical risks are not likely to
subdue easily, the Seoul currency market is expected to undergo higher volatility
for the time being.
"The government's supply of foreign currency liquidity would help ease some
stress in the market, but the stabilization of the global financial markets
should precede," said Jeon Seung-ji, a currency analyst at Samsung Futures Inc.
However, experts said the geopolitical risks would not be grave enough to make a
turnaround of the local currency's long-term rising trend to the dollar.
The Korean currency has been on the upswing versus the dollar amid the economic
recovery and the current account surplus. The local currency has climbed about 7
percent against the greenback so far this year.
"If consensus is building that a possible armed collision will not come, the
Korean currency will likely return to the upward trend to the dollar. The North
Korean issue and the European debt concerns are not seen as cutting the Korean
economy's growth momentum," said Lim Ji-won, an economist at JPMorgan Chase & Co.
sooyeon@yna.co.kr
(END)
