|Dealers at Korea Exchange Bank headquarters in downtown Seoul are busy in action as the exchange rate between the Korean won and the U.S. dollar tumbled on Wednesday. (Yonhap)|
The Korean won started out at 1,027 against the U.S. dollar on Wednesday, 3.3 won stronger than Friday’s closing rate.
This was the first time since August 2008, shortly before the global financial crisis broke out, that the rate breached the 1,030 won per dollar level.
The rate continued to fall and closed at 1,022.5 won per dollar, down 7.8 won from Friday.
With the rapid fall of the dollar, the local stock market, including the benchmark KOSPI, also took a downturn, especially in the chemical, transportation and steel sectors.
Hyundai Motor, Hyundai Mobis and Kia Motors ― the so-called automobile indicator trio ― dropped by 0.89 percent, 3.4 percent and 0.36 percent respectively from Friday’s closing prices. Market indicator Samsung Electronics, too, fell by 0.15 percent.
The won’s relative gain was a projected result of the dollar’s depreciation against major currencies amid prolonged slow growth during the first quarter of the year. It was also attributable to the abundance of the dollar in the market as the nation’s exports remained strong in April.
In March, Korea recorded a current account surplus for 25 months straight and the Bank of Korea forecasted that this year’s total surplus will reach the $68 billion level.
In contrast, the U.S. dollar remained low over the long weekend, cornered by the lower-than-expected quarterly performance and the rise of the euro.
The U.S. gross domestic product for the first quarter, as announced last Thursday, was a mere 0.1 percent, which was far below the market expectation of 1.5 percent, as well as the lowest since the last quarter of 2012.
“The greenback weakened as data on the first-quarter economic growth in the U.S. was softer than expected and the euro gained ground as prospects for a rate cut eased,” said Jeon Seung-ji, a currency analyst at Samsung Futures Co.
She said that foreign exchange authorities may intervene in the market to prevent the won from further rising to breach the 1,020 won level.
By Bae Hyun-jung, news reports