Won soars 16.5 pct on currency swap deal

(ATTN: RECAST headline, lead; UPDATES with closing price, throughout)
SEOUL, Oct. 30 (Yonhap) -- The South Korean won spiked 16.5 percent against the
dollar Thursday on a currency swap deal with the U.S., a bullish stock market and
Seoul's decreased current account deficit, dealers said.
The local currency closed at 1,250 against the greenback, up 177 won from the
previous session's close and the biggest daily gain since Dec. 26, 1997.
The currency, which plummeted to a more than ten year low of 1,495 won to the
greenback, rallied as foreign exchange authorities accelerated moves to restore
confidence in financial markets.
The Bank of Korea (BOK) said earlier in the day it has concluded 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 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.
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's sharp rise was also helped by a central bank report that the country's
current account shortfall narrowed sharply to $1.22 billion in September,
compared with a deficit of $4.7 billion the previous month.
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.