Roundup: S. Korea's forex rate marks downturn after finance ministry's remarks on intervention
Tuesday, April 27, 2010 4:44 AM
SEOUL, Apr. 27, 2010 (Xinhua News Agency) -- The South Korean currency won Tuesday ended at 1,110.10 won against one U.S. dollar, down 6 won from the previous close after the currency authorities hinted at stepping into the forex market if necessary.
The forex rate, as it ended its recent surge against the U.S. dollar to threaten the 1,100-won level, is not likely to keep its upward trend as the government is firm to stem the won's hike.
CURRENCY AUTHORITIES SHOW FIRM INTENTION ON FOREX MARKET STABILIZATION
The South Korean Finance Ministry said Tuesday it will take measures to stem the won's current hike against the U.S. dollar if the forex rate grows excessively volatile.
"The authorities believe there is one-sided bet in the local currency market due to market expectations on the South Korean won 's appreciation against the U.S. dollar," Kim Ik-joo, chief of the international financial bureau at the Ministry of Strategy and Finance, said.
"We will take appropriate measures to stabilize the market if the foreign exchange rate turns excessively volatile," Kim added.
The comments on the forex market by currency authorities were the first since late October, which market participants interpreted as the finance ministry's firm intention to take active measures to stabilize the market.
Following the comments, the local currency reversed its steady upward move to a sharp downturn during the afternoon session, leading to a six-won fall.
LOCAL CURRENCY LIKELY TO KEEP CLIMBING AGAINST U.S. DOLLAR
Amid the sudden fall of the South Korean won, market participants showed conflicting expectations on the local currency' s move down the road.
"Due to lingering uncertainties, such as a plunge in China's stock markets and Greek debt problems, the foreign ministry's remarks made it more complex to see how the forex market would turn out," a dealer was quoted as saying by a local media report.
As the authorities are expected to show a strong push on the forex move, the local currency may not be able to mark a sharp rise as it recently did, the report said.
However, despite the government's firm intention, most experts expect it may not be able to stop the won's hike against the greenback, local news channel MBN said.
"Although the government's intervention may slow down the pace of the won's appreciation for the short term, it may not be able to stop the appreciation itself for the long term," MBN said, citing local experts.
According to the media, mainly due to recent strong foreign buying and Samsung Life Insurance's planned IPO in May, it may be difficult for the authorities to stop the speculative demand in the currency market.
Also, the strong local stock markets, buoyed by foreign investors, and brisk export conditions are likely to add to the strong won, the MBN said.
The won-to-U.S. dollar rate, between the upward and downward forces, will likely settle around 1,105-won level, local experts said.
Tuesday, April 27, 2010 4:44 AM
SEOUL, Apr. 27, 2010 (Xinhua News Agency) -- The South Korean currency won Tuesday ended at 1,110.10 won against one U.S. dollar, down 6 won from the previous close after the currency authorities hinted at stepping into the forex market if necessary.
The forex rate, as it ended its recent surge against the U.S. dollar to threaten the 1,100-won level, is not likely to keep its upward trend as the government is firm to stem the won's hike.
CURRENCY AUTHORITIES SHOW FIRM INTENTION ON FOREX MARKET STABILIZATION
The South Korean Finance Ministry said Tuesday it will take measures to stem the won's current hike against the U.S. dollar if the forex rate grows excessively volatile.
"The authorities believe there is one-sided bet in the local currency market due to market expectations on the South Korean won 's appreciation against the U.S. dollar," Kim Ik-joo, chief of the international financial bureau at the Ministry of Strategy and Finance, said.
"We will take appropriate measures to stabilize the market if the foreign exchange rate turns excessively volatile," Kim added.
The comments on the forex market by currency authorities were the first since late October, which market participants interpreted as the finance ministry's firm intention to take active measures to stabilize the market.
Following the comments, the local currency reversed its steady upward move to a sharp downturn during the afternoon session, leading to a six-won fall.
LOCAL CURRENCY LIKELY TO KEEP CLIMBING AGAINST U.S. DOLLAR
Amid the sudden fall of the South Korean won, market participants showed conflicting expectations on the local currency' s move down the road.
"Due to lingering uncertainties, such as a plunge in China's stock markets and Greek debt problems, the foreign ministry's remarks made it more complex to see how the forex market would turn out," a dealer was quoted as saying by a local media report.
As the authorities are expected to show a strong push on the forex move, the local currency may not be able to mark a sharp rise as it recently did, the report said.
However, despite the government's firm intention, most experts expect it may not be able to stop the won's hike against the greenback, local news channel MBN said.
"Although the government's intervention may slow down the pace of the won's appreciation for the short term, it may not be able to stop the appreciation itself for the long term," MBN said, citing local experts.
According to the media, mainly due to recent strong foreign buying and Samsung Life Insurance's planned IPO in May, it may be difficult for the authorities to stop the speculative demand in the currency market.
Also, the strong local stock markets, buoyed by foreign investors, and brisk export conditions are likely to add to the strong won, the MBN said.
The won-to-U.S. dollar rate, between the upward and downward forces, will likely settle around 1,105-won level, local experts said.