S. Korean currency jumps 2.9 pct vs dollar

(ATTN: RECASTS headline, lead; UPDATES with market close throughout)
SEOUL, Oct. 17 (Yonhap) -- South Korea's currency jumped against the U.S. dollar
on Friday as sentiment was eased by the central bank's move to supply dollars to
more banks and the decision by Moody's to retain South Korea's credit ratings
outlook, dealers said.
The local currency closed at 1,334 won to the greenback, up 39 won, or 2.9
percent, from Thursday after posting the biggest daily loss in almost 11 years in
the previous session.
The Korean won has lost almost 30 percent versus the dollar so far this year,
putting upward pressure on inflation.
"The decision by Moody's Investors Service to retain its stable outlook for South
Korea's credit ratings helped the local currency gain ground," said Jeon
Seung-ji, a currency analyst at Samsung Futures Inc. "Market players are also
waiting for the government's measures to tackle the current financial rout."
The Korean currency declined to a session low of 1,370 won at one point mainly
because the country's key stock index dipped into negative territory.
But the move by South Korea's central bank to allow more banks to receive dollars
through won-dollar swap deals added to the won's gains.
The Bank of Korea said earlier in the day that it will introduce an open bidding
system for won-dollar swaps in an effort to supply more dollar liquidity to the
local market. The move comes as domestic banks face a severe dollar shortage, hit
by the global credit crunch.
Global credit appraiser Moody's said the agency has maintained its A2 "stable"
outlook for South Korea's sovereign ratings, citing the ability of authorities to
manage the country's vulnerability to the global financial turmoil.
Earlier in the day, senior economic policymakers held a meeting to discuss
measures to ease growing concerns in the market. The government is considering
providing state guarantees for inter-bank loans as part of efforts to stabilize
financial markets and stave off their negative impact on the real economy. It
plans to announce a set of measures on Sunday.
U.S. stock markets gained on Thursday after volatile trading. The Dow Jones
industrial average rose 4.68 percent and the tech-dominated Nasdaq composite
index climbed 5.49 percent.
Despite Wall Street gains, the benchmark Korea Composite Stock Price Index
(KOSPI) closed down 2.73 percent to 1,180.67. Foreign investors dumped 492.5
billion won (US$370 million) on the Seoul bourse.
"The local currency is unlikely to plunge to the 1,400-won level, but the won is
expected to be under downward pressure as foreign investors will likely pull
their money out of the Korean market," said Shin Jin-ho, a currency analyst at
Woori Futures, adding that the Korean currency may trade between 1,280 and 1,400
won next week.