ID :
27524
Thu, 10/30/2008 - 17:42
Auther :
Shortlink :
https://www.oananews.org//node/27524
The shortlink copeid
Won rises on currency swap deal, narrowed current account deficit
SEOUL, Oct. 30 (Yonhap) -- The South Korean won rose sharply against the U.S. dollar Thursday morning on expectations that a currency swap deal between Seoul and Washington would ease concerns about a dollar shortage facing local banks and companies, dealers said.
A bullish run on the local stock market also helped the local currency gain
against the greenback while a narrowed current account deficit reduced dollar
demand, they said.
The won was trading at 1,297.00 as of 10:40 a.m., up 130 won from the previous
session's close.
Earlier in the day, the Bank of Korea said it will sign a currency swap agreement
of up to US$30 billion with the U.S. Fed, which will help stem the won's sharp
decline against the dollar.
BOK Gov. Lee Seong-tae said the swap deal will help the local financial market
and ease concerns about local banks' dollar shortage.
Finance Minister Kang Man-soo also said earlier in the day that the country is
seeking to forge similar deals with Japan and China.
"The news will help market sentiment improve, and help ease concerns over a
shortage of dollars at banks and local companies," said Kwon Woo-hyun, a currency
dealer at Woori Bank. "But it will take time for the currency rate to stabilize
due to continued foreign sell-offs of local stocks."
The local currency has lost more than 30 percent against the greenback so far
this year, in large part due to the continued sell-offs of local stocks by
foreign investors and concerns that local lenders are facing difficulties
repaying short-term foreign debts.
The country's current account shortfall sharply narrowed to $1.22 billion in
September, compared with a deficit of $4.7 billion the previous month, according
to the central bank.
South Korea has posted current account shortfalls for every month this year
except May as oil prices and the won's tumble drove up the cost of imported
goods.
A continued deficit raised concerns that declining dollar supplies will further
put downward pressure on the local currency.
The bank forecast that the economy is likely to post a current account surplus of
more than $1 billion in October as the trade balance swings to the black.
A bullish run on the local stock market also helped the local currency gain
against the greenback while a narrowed current account deficit reduced dollar
demand, they said.
The won was trading at 1,297.00 as of 10:40 a.m., up 130 won from the previous
session's close.
Earlier in the day, the Bank of Korea said it will sign a currency swap agreement
of up to US$30 billion with the U.S. Fed, which will help stem the won's sharp
decline against the dollar.
BOK Gov. Lee Seong-tae said the swap deal will help the local financial market
and ease concerns about local banks' dollar shortage.
Finance Minister Kang Man-soo also said earlier in the day that the country is
seeking to forge similar deals with Japan and China.
"The news will help market sentiment improve, and help ease concerns over a
shortage of dollars at banks and local companies," said Kwon Woo-hyun, a currency
dealer at Woori Bank. "But it will take time for the currency rate to stabilize
due to continued foreign sell-offs of local stocks."
The local currency has lost more than 30 percent against the greenback so far
this year, in large part due to the continued sell-offs of local stocks by
foreign investors and concerns that local lenders are facing difficulties
repaying short-term foreign debts.
The country's current account shortfall sharply narrowed to $1.22 billion in
September, compared with a deficit of $4.7 billion the previous month, according
to the central bank.
South Korea has posted current account shortfalls for every month this year
except May as oil prices and the won's tumble drove up the cost of imported
goods.
A continued deficit raised concerns that declining dollar supplies will further
put downward pressure on the local currency.
The bank forecast that the economy is likely to post a current account surplus of
more than $1 billion in October as the trade balance swings to the black.
