S. Korea's currency forecast to appreciate sharply over years: report

By Koh Byung-joon
SEOUL, Sept. 22 (Yonhap) -- South Korea's currency will appreciate sharply
against the U.S. dollar over the next few years as jitters over a liquidity
crunch ease and the nation's economic fundamentals get stronger, a report
predicted Tuesday.

The won-dollar exchange rate is expected to decline to 980 won in 2011 after
standing at 1,273 and 1,054 in 2009 and 2010, respectively, according to the
report by Global Insight, an international financial consulting company.
The forecast for a stronger won was supported by expectations the Korean economy,
Asia's fourth-largest, will make a "V"-shaped recovery after suffering the worst
downturn in more than a decade this year.
The optimistic view comes along with eased market concerns over a liquidity
crunch, which sent the won's value into a free fall following the financial
crisis that started in the wake of the collapse of Lehman Brothers last
September.
The financial turbulence prompted borrowing conditions to tighten here,
heightening worries among local banks and exporters that they might not be able
to meet their financial needs or service short-term debts. It also caused the
local currency to lose substantial ground against the U.S. greenback last year.
The currency, however, seems to be gaining ground in recent months as anxiety
over a liquidity crunch is easing after local banks beefed up efforts to borrow
from overseas and the country's current account balance remained in the black.
On Monday, the won closed at 1,204.4 against the greenback, the strongest level
since Sept. 29, 2008.
"In the wake of the financial rout last year, the local currency lost its value
sharply but it seems to have begun to stabilize starting this year and such a
trend will likely last for the time being," a finance ministry official said.
kokobj@yna.co.kr
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