S. Korean won's volatility falls to pre-Lehman level

SEOUL, Jan. 7 (Yonhap) -- Volatility of the South Korean currency fell in
December back to levels seen before the financial market meltdown caused by
Lehman Brothers' collapse, adding to signs of a stabilization in the local
foreign exchange market, the central bank said Thursday.

The Korean won's average swing against the U.S. dollar during one day reached 6.1
won in the last month of 2009, lower than the average move of 6.9 won recorded
for 2008 August, the Bank of Korea (BOK) said in a statement.
"The currency cut down its volatility to the level seen before the bankruptcy of
the U.S. financial giant disrupted the global financial market", the central bank
said.
The won's intra-day swings widened up to 26.2 won during the January-March period
last year when the uncertainties over the economies at home and abroad led to the
currency's erratic trading, according to the BOK.
Amid the global economic slowdown, investors' pursuit of safe-heaven in the
dollar and flight from emerging-market currencies plunged the won to as low as
1,570.30 won against the greenback on March 4.
But the currency has gained substantially since, appreciating against the dollar
by 38 percent as of Wednesday, underpinned by the nation's expanding foreign
exchange reserves and massive surpluses in the currency account.
The steep losses of the South Korean won haunted the domestic banking system
early last year, fanning concerns that lenders may fall short of reservicing
their expanded foreign liabilities before a fast rebound relieved such anxieties.
pbr@yna.co.kr
(END)

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