ID :
46318
Wed, 02/18/2009 - 23:15
Auther :
Shortlink :
https://www.oananews.org//node/46318
The shortlink copeid
Korean currency falls to 2-month low on renewed financial fears
(ATTN: UPDATES with closing prices in the first 3 paras)
SEOUL, Feb. 18 (Yonhap) -- The South Korean currency plunged to the lowest level
in more than two months against the U.S. dollar on Wednesday as investors sold
their assets here in pursuit of safer options amid growing concerns over a fresh
credit crisis, dealers said.
The local currency closed at 1,468 won to the greenback, down 12.5 won from the
previous session, the lowest level since Dec. 5. The currency has been on the
decline for seven straight sessions, with its value falling about 14 percent
against the dollar so far this year.
Foreigners sold a net of over 1 trillion won worth of local shares over the past
week, weighing on the nation's financial markets. The key stock index also ended
down 1.24 percent after plummeting 4.11 percent the previous day.
"Downbeat data on U.S. factory activity and growing default risks in eastern
European countries spawned concerns over a renewed credit crisis, prompting
investors to pursue safer assets including the dollar to avoid losses," said Shin
Jin-ho, a currency analyst at Woori Futures Co.
Tightening foreign capital markets are adding to downward pressure on the sliding
won as concerns mount that local banks may face potential dollar shortages amid
soaring dollar funding costs, industry sources said.
A growing number of local banks are putting off raising foreign funds after Woori
Bank, the banking unit of Woori Finance Holdings Co., recently decided not to
exercise an option for early repayment of foreign debts maturing in 2014.
Against this backdrop, rumors of a crisis are spreading as a chunk of foreign
currency-denominated bonds issued by local banks will mature in March, raising
fears that banks will not be able to pay back the debts amid a dollar shortage.
On Tuesday, the government brushed off the concerns as "excessive," saying it has
"sufficient" foreign reserves to cope with any contingency.
Finance Minister Yoon Jeung-hyu said in a government meeting earlier in the day
that his top priority is to stabilize the financial markets as the stability is
indispensable for efforts to resuscitate the economy.
Analysts, however, warn the government does not have many options available to
stabilize the market as it has already used a large part of its currency swap
lines and with its current foreign reserve stockpiles of US$201.7 billion
regarded as insufficient by a number of market players.
"The government will be in a tight position to tap more from the $30 billion
currency swap deal with the U.S. as it has already withdrawn $16.3 billion so
far, part of which will start to mature on Feb. 26," Shin said.
"At a time when $200 billion is regarded as a Maginot line for foreign reserves
holdings, the government doesn't have ample ammunition to intervene in the
currency markets," he added.
kokobj@yna.co.kr
(END)
SEOUL, Feb. 18 (Yonhap) -- The South Korean currency plunged to the lowest level
in more than two months against the U.S. dollar on Wednesday as investors sold
their assets here in pursuit of safer options amid growing concerns over a fresh
credit crisis, dealers said.
The local currency closed at 1,468 won to the greenback, down 12.5 won from the
previous session, the lowest level since Dec. 5. The currency has been on the
decline for seven straight sessions, with its value falling about 14 percent
against the dollar so far this year.
Foreigners sold a net of over 1 trillion won worth of local shares over the past
week, weighing on the nation's financial markets. The key stock index also ended
down 1.24 percent after plummeting 4.11 percent the previous day.
"Downbeat data on U.S. factory activity and growing default risks in eastern
European countries spawned concerns over a renewed credit crisis, prompting
investors to pursue safer assets including the dollar to avoid losses," said Shin
Jin-ho, a currency analyst at Woori Futures Co.
Tightening foreign capital markets are adding to downward pressure on the sliding
won as concerns mount that local banks may face potential dollar shortages amid
soaring dollar funding costs, industry sources said.
A growing number of local banks are putting off raising foreign funds after Woori
Bank, the banking unit of Woori Finance Holdings Co., recently decided not to
exercise an option for early repayment of foreign debts maturing in 2014.
Against this backdrop, rumors of a crisis are spreading as a chunk of foreign
currency-denominated bonds issued by local banks will mature in March, raising
fears that banks will not be able to pay back the debts amid a dollar shortage.
On Tuesday, the government brushed off the concerns as "excessive," saying it has
"sufficient" foreign reserves to cope with any contingency.
Finance Minister Yoon Jeung-hyu said in a government meeting earlier in the day
that his top priority is to stabilize the financial markets as the stability is
indispensable for efforts to resuscitate the economy.
Analysts, however, warn the government does not have many options available to
stabilize the market as it has already used a large part of its currency swap
lines and with its current foreign reserve stockpiles of US$201.7 billion
regarded as insufficient by a number of market players.
"The government will be in a tight position to tap more from the $30 billion
currency swap deal with the U.S. as it has already withdrawn $16.3 billion so
far, part of which will start to mature on Feb. 26," Shin said.
"At a time when $200 billion is regarded as a Maginot line for foreign reserves
holdings, the government doesn't have ample ammunition to intervene in the
currency markets," he added.
kokobj@yna.co.kr
(END)
