South Korean Won Falls From 1-year High Against Greenback
October 09 2009 - 12:48AM
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The South Korean won fell from a more than one year high against
the US dollar during Friday's early Asian trading as South Korea's
central bank kept its key interest rate on hold at a record low of
2.00% for the eighth straight month as signs of an economic
recovery have yet to be conspicuous. On the other hand, the won
climbed to a 2-day high against the yen, due to across the board
rallying of the latter.
Most analysts expected the bank to maintain the status quo,
although a few felt that the bank might follow Australia's lead
from earlier in the week with a 25 basis point hike - signaling
that the global economic slowdown is indeed over. But the bank's
commentary indicated that a rate hike may not be coming as soon as
some had expected.
The BOK lowered the rate by a total of 3.25 percentage points
between October and February in a bid to put the brakes on a sharp
economic free-fall.
"Looking ahead, the committee will maintain accommodative policy
stance for the time being and do what is needed to bring about the
continuation of the recent improving pattern of economic movements
and financial market stabilization," the bank said.
The South Korean won that rose to a more than one year high of
1164.10 against the US dollar by 8:05 pm ET Thursday, lost ground
thereafter. As of now, the won is trading at 1167.40 against the
buck, compared with yesterday's close of 1164.60.
Since its last monetary policy announcement on September 08, the
Korean won has climbed around 5.75% against the dollar as the
economic indicators showed that the economy is recovering at a
faster-than-expected pace. This raised market expectations that the
central bank may hike the rate in the near future. But the won
trimmed its gains as the BoK decided to keep rates on hold
today.
From U.S., the trade gap data for August is due out at 8:30 am
ET. Economists estimate that the trade gap widened to $32.9 billion
in the month.
In early Asian trading on Friday, the South Korean won edged up
to a 2-day high against its Japanese counterpart. The won reached
13.0920 against the yen, with 13.024 seen as the next upside target
level. The yen-won pair was worth 13.17 at yesterday's New York
session close.
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