Concerns grow over prolonged won-dollar appreciation

By 최희석

Published : Aug. 10, 2016 - 17:49

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[THE INVESTOR] With the South Korean won strengthening against the dollar concerns are rising that if the trend continues it could damage the country’s economy.

On Aug. 10, the won closed at 1,098.6 won to the dollar, falling below the 1,100-won line since the rate hit 1,097.5 won on June 22, 2015.

According to LG Economic Research Institute’s analysis, the won has appreciated 3.3 percent since UK’s referendum on leaving the European Union on June 23.

An employee of Korea Exchange Bank counts US dollars at the lender's main office in Seoul.

While not alone in appreciating against the dollar, the number of major economies that have seen their currency strengthen more against dollar remains small with Japan and Brazil among the few. In contrast, the Chinese yuan has depreciated 0.9 percent and the euro by 2.3 percent.

While the developments have in part been caused by temporary factors such as the central banks of major economies lowering key rates, experts say that the Korean won’s appreciation could continue due to the view that it is undervalued.

A US think tank put the appropriate won-dollar rate at 1,007 won to the dollar, while Standard and Poor’s has recently raised Korea’s sovereign ratings.

By Choi He-suk (cheesuk@heraldcorp.com)

Concerns grow over prolonged won-dollar appreciation

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