Won rebounds against U.S. dollar on intervention

SEOUL, March 3 (Yonhap) -- The South Korean currency rose against the U.S. dollar
for the first time in four sessions on Tuesday as foreign exchange authorities
apparently stepped in to stem the won's sharp decline, dealers said.
After choppy trading, the local currency closed at 1,552.4 won to the greenback,
up 17.9 won or 1.15 percent from the previous session's close. The Korean
currency declined to an 11-year low to the dollar on Monday amid dollar shortgage
concerns.
"Foreign exchange authorities showed strong will today (to stem the won's
losses)," said Kim Sung-sun, a dealer at the Industrial Bank of Korea. "Dollar
buying by offshore investors also abated compared with recent sessions."
Downbeat news at home and abroad has weighed on the local financial markets.
Speculation over a capital outflow of foreign investors in March and rising
default risks in some Eastern European countries, compounded by a lingering North
Korean missile threat, have been putting downward pressure on the won.
The local currency started weaker, falling as low as 1,594 won at one point, but
the Korean unit reversed its earlier course after foreign exchange authorities
intervened in the market to curb the won's sharp losses, market watchers say. The
local currency has dipped 18.9 percent to the greenback so far this year.
Analysts said the country's key stock index's switch to the upswing and
February's data on the country's foreign exchange reserves also helped soothe
sentiment. The benchmark Korea Composite Stock Price Index (KOSPI) closed 0.66
percent higher.
The country's foreign exchange reserves declined in February for the first time
in three months, but managed to stay above the psychologically important $200
billion mark.
Finance Minister Yoon Jeung-hyun told reporters the won-dollar foreign exchange
rate will not go only in one direction, adding that authorities are watching the
market.
Analysts said the won's rebound may be short-lived as factors surrounding the
local currency market are exerting downward pressure on the won.
"Uncertainties from overseas markets still persist. It will be difficult to
reverse the direction of the won's value," said Shin Jin-ho, a currency analyst
at Woori Futures Co.
sooyeon@yna.co.kr
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