October 27, 2010
Won set to rise further
The won remains undervalued compared to its level before the global financial crisis, Haruhiko Kuroda, the president of the Asian Development Bank, said in Seoul yesterday.
Some currencies, including the Korean won, “have recently appreciated quite substantially, but compared with the level before the crisis, the won is still depreciated,” he explained.
Kuroda urged emerging Asian economies to cooperate on currency realignment to allow their monetary units to rise in value.
The won has risen 3.3 percent in the past month against the dollar, the best performance among Asian economies aside from the Japanese yen.
The won rose in value to 900.75 against the dollar in October 2007 but then fell in the wake of the 2008 global financial crisis. It closed yesterday at 1,116.8 to the dollar.
Participants at a meeting of G-20 finance minister and central bankers in Gyeongju, North Gyeongsang, last week agreed that currencies should be based on a “market-determined” exchange rate system to avoid competitive devaluation.
Whether the won will rise in the months ahead is still an open question. Korean Finance Minister Yoon Jeung-hyun suggested last week that the government is monitoring capital inflows and will take action to slow them if necessary.
A slowing economy is also expected to weigh on the currency, with the government scheduled to reveal third-quarter economic data today.
But most analysts still believe the won will strengthen against the dollar for the time being.
“It is certain that the won will strengthen against the U.S. dollar but we shouldn’t automatically assume the value of the won will strengthen against other currencies as well,” said Bae Min-geun, a researcher with the LG Economic Research Institute.
He added that the currencies of emerging economies will rise in value over the next few months.
Capital Economics, a London-based economic consultancy, predicted this week a further appreciation of the won “even though more intervention and curbs on capital flows should be expected.” It said that the won could rise to 1,100 won against the dollar by the end of this year and to 1,000 won by the end of next year.
Another factor that could strengthen the won is if foreigners continue buying Korean equities in the hopes that they can benefit from foreign exchange gains with the won’s appreciation. The Kospi share index yesterday closed at its highest level since December 2007.
http://www.einnews.com/southkorea/
Won set to rise further
The won remains undervalued compared to its level before the global financial crisis, Haruhiko Kuroda, the president of the Asian Development Bank, said in Seoul yesterday.
Some currencies, including the Korean won, “have recently appreciated quite substantially, but compared with the level before the crisis, the won is still depreciated,” he explained.
Kuroda urged emerging Asian economies to cooperate on currency realignment to allow their monetary units to rise in value.
The won has risen 3.3 percent in the past month against the dollar, the best performance among Asian economies aside from the Japanese yen.
The won rose in value to 900.75 against the dollar in October 2007 but then fell in the wake of the 2008 global financial crisis. It closed yesterday at 1,116.8 to the dollar.
Participants at a meeting of G-20 finance minister and central bankers in Gyeongju, North Gyeongsang, last week agreed that currencies should be based on a “market-determined” exchange rate system to avoid competitive devaluation.
Whether the won will rise in the months ahead is still an open question. Korean Finance Minister Yoon Jeung-hyun suggested last week that the government is monitoring capital inflows and will take action to slow them if necessary.
A slowing economy is also expected to weigh on the currency, with the government scheduled to reveal third-quarter economic data today.
But most analysts still believe the won will strengthen against the dollar for the time being.
“It is certain that the won will strengthen against the U.S. dollar but we shouldn’t automatically assume the value of the won will strengthen against other currencies as well,” said Bae Min-geun, a researcher with the LG Economic Research Institute.
He added that the currencies of emerging economies will rise in value over the next few months.
Capital Economics, a London-based economic consultancy, predicted this week a further appreciation of the won “even though more intervention and curbs on capital flows should be expected.” It said that the won could rise to 1,100 won against the dollar by the end of this year and to 1,000 won by the end of next year.
Another factor that could strengthen the won is if foreigners continue buying Korean equities in the hopes that they can benefit from foreign exchange gains with the won’s appreciation. The Kospi share index yesterday closed at its highest level since December 2007.
http://www.einnews.com/southkorea/
