ID :
209662
Tue, 09/27/2011 - 10:47
Auther :
Shortlink :
https://oananews.org//node/209662
The shortlink copeid
S. Korea has lowest chance of currency crisis in Asia: economist
SEOUL, Sept. 27 (Yonhap) -- South Korea is one of the least likely Asian countries to suffer a currency crisis despite growing concern about the won's recent volatility, a senior economist at Nomura International Ltd. said Tuesday.
The local currency had been tumbling against the U.S. dollar amid growing investor appetite for safer assets. The won closed at 1,173.1 won against the greenback on Tuesday after hitting a 13-month low in the previous session.
"In a foreign currency crisis such as the 1997 Asian financial crisis, room for policy response was limited as tightening was one condition for borrowing," said Kwon Young-sun. "But as we saw in 2008, there is room for different policies such as currency swaps, which means such policy responses can again be used if a foreign currency crisis occurs."
If market sentiment turns positive, investors are likely to focus on currency valuation and if they feel the Korean won is undervalued it may stabilize, said Kwon, stressing the local currency is likely to strengthen in the long term.
Kwon said South Korea was one of the least likely countries to face a currency crisis risk in its global emerging market risk index. Among the 34 countries tallied, only Argentina and Peru were considered at lower risk than South Korea.
The economist forecast the won to reach 1,020 against the U.S. dollar by year-end and 960 by the end of next year.
Nomura also forecast the benchmark Korea Composite Stock Price Index (KOSPI) to settle at 2,120 by the end of the year, but added it could further slide to an 1,900 level due to fragile market sentiment.
The company recommended investors snap up shares of automakers and construction firms but to refrain from buying tech shares.
"A weakening won usually bodes well for export-focused technology firms, but the problem is there is no global demand for televisions and personal computers," said Nomura Financial Investment Korea Co. Research Head James Kim. "Besides Samsung Electronics Co., most local firms are likely to face grim earnings figures in the latter half of the year."
mil@yna.co.kr
(END)
The local currency had been tumbling against the U.S. dollar amid growing investor appetite for safer assets. The won closed at 1,173.1 won against the greenback on Tuesday after hitting a 13-month low in the previous session.
"In a foreign currency crisis such as the 1997 Asian financial crisis, room for policy response was limited as tightening was one condition for borrowing," said Kwon Young-sun. "But as we saw in 2008, there is room for different policies such as currency swaps, which means such policy responses can again be used if a foreign currency crisis occurs."
If market sentiment turns positive, investors are likely to focus on currency valuation and if they feel the Korean won is undervalued it may stabilize, said Kwon, stressing the local currency is likely to strengthen in the long term.
Kwon said South Korea was one of the least likely countries to face a currency crisis risk in its global emerging market risk index. Among the 34 countries tallied, only Argentina and Peru were considered at lower risk than South Korea.
The economist forecast the won to reach 1,020 against the U.S. dollar by year-end and 960 by the end of next year.
Nomura also forecast the benchmark Korea Composite Stock Price Index (KOSPI) to settle at 2,120 by the end of the year, but added it could further slide to an 1,900 level due to fragile market sentiment.
The company recommended investors snap up shares of automakers and construction firms but to refrain from buying tech shares.
"A weakening won usually bodes well for export-focused technology firms, but the problem is there is no global demand for televisions and personal computers," said Nomura Financial Investment Korea Co. Research Head James Kim. "Besides Samsung Electronics Co., most local firms are likely to face grim earnings figures in the latter half of the year."
mil@yna.co.kr
(END)
