S. Korean won hits over 9-month high to dollar

SEOUL, July 31 (Yonhap) -- The South Korean currency rose to an over nine-month
high against the U.S. dollar on Friday as economic recovery hopes boosted foreign
investors' appetite for risky assets, currency dealers said.

The local currency closed at 1,228.5 won to the greenback, up 8.3 won or 0.68
percent, from the previous session. It marked the strongest level since Oct. 14,
2008 and hit the highest closing this year.
"Stock rallies boosted demand for the Korean won," said Jeon Seung-ji, a currency
analyst at Samsung Futures Inc. "Better-than-expected readings about industrial
output extended earlier gains by Seoul stocks."
The local currency rose to an intra-day high of 1,226.5 won in late trading.
Amid rising prospects for an economic recovery and solid earnings momentum,
foreign investors continued to snap up Seoul stocks for the 13th straight
session, lending support to the Korean won. Offshore investors bought a net 508.7
billion won (US$414.1 million) worth of local stocks on the main bourse.
The benchmark Korea Composite Stock Price Index (KOSPI) climbed 1.47 percent to
1,557.29 after the country's robust industrial output bolstered optimism about an
economic recovery.
South Korea's industrial output fell 1.2 percent in June from a year earlier,
compared with a 9 percent on-year contraction in May.
The Korean currency tumbled 25.7 percent to the greenback last year alone amid
concerns over dollar liquidity. But it has gained about 28 percent since it hit
an 11-year low of 1,570.3 won in early March on the back of increased overseas
borrowing by local banks and the country's widening trade surplus.
Analysts said now that the Korean won has surpassed the psychologically important
1,230-won level, its ascent will likely continue.
"As the country's current account has been in the black and local banks do not
need to desperately chase the dollar to service their debts, the Korean currency
may be on an upward trend," said Jun Min-kyu, an economist at Korea Investment &
Securities Co. He predicted that the Korean unit may rise to the 1,150-won level
by the year's end.
Jeon at Samsung Futures, meanwhile, said whether the won makes additional gains
will hinge on the pace of a global economic recovery and the direction of the
stock market.
"If the stock market continues to gain ground, the Korean unit is likely to
ascend further. But because there is speculation about a possible dollar buying
intervention by currency authorities, the pace of the won's appreciation may
slow," she said, adding that the won may rise to the 1,200 level in August.
sooyeon@yna.co.kr
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