Korean won slides 1.7 pct to dollar on Dubai debt woes

SEOUL, Nov. 27 (Yonhap) -- The South Korean currency declined 1.72 percent
against the U.S. dollar on Friday on Dubai debt fears prompted investors to flock
into safe assets, analysts said.

The local currency closed at 1,175.5 won to the greenback, down 20.20 won from
the previous session.
"Investor jitters amplified over fears about a possible debt default in Dubai,
raising their appetite for safer assets," said Byeon Ji-young, a currency analyst
at Woori Futures Co.
Global financial markets were turned into a tailspin on the news that deb-ridden
Dubai World, a Dubai government investment fund, called for its creditors to
agree to a standstill on debts of around US$60 billion.
The benchmark Korea Composite Stock Price Index tumbled 4.69 percent to 1,524.5
on Friday, hit by the Dubai fears. Foreign investors sold a net 208.8 billion won
($179.2 million) worth of Seoul stocks.
Concerns over a possible debt default by Dubai overshadowed the news that South
Korea posted a current account surplus for the ninth straight month in October.
The Financial Services Commission, the country's financial regulator, said the
impact of the Dubai debt fears would be limited on the local markets as Korean
financial firms' exposure to such debts is not large. But it added it is closely
monitoring the local financial markets.
Analysts said the Korean unit is likely to be under downward pressure to the
greenback for the time being, but the Dubai concerns are not be strong enough to
end the dollar's weakness.
"Volatility increased amid a mixture of the Dubai risk and investors' move to
take profits toward the end of this year," said Jung Mi-young, a currency analyst
at Samsung Futures Co. "For the time being, the Korean currency will be under the
downward pressure with the won likely to trade between 1,150 and 1,200 to the
greenback by end-year."
But she said that the issue would not likely to reverse the trend of the dollar
weakness, given that the U.S. is widely expected to keep its key interest rates
at a record low for the extended period of time.
sooyeon@yna.co.kr