February 09, 2011
Won likely to strengthen to U.S. dollar
The won appreciated against the U.S. dollar for the third consecutive trading days as it edged close to the 1,100 won mark.
Analysts say it’s only a matter of time before the won breaks the 1,100 won barrier because of the bullish Seoul stock market and the fundamentally strong growth of the Korean economy.
The Korean won has remained above the 1,100 won mark for nearly two and half years. The last time it fell below 1,100 won was on Sept. 10, 2008, when the won closed at 1,095.50 won against the U.S. dollar.
The won yesterday closed at 1,140.70 won, 2.80 won lower than Monday. However, during the day it strengthened to 1,102.50 won.
“The won for an extensive period has been hovering around 1,120 won against the dollar but it could appreciate to 1,100 won this month,” said Lee Jin-woo, head of the NH Investment and Futures research center, in a report released yesterday.
Lee said further appreciation of the won is likely,as there is still room for the stock market to go up, triggered by the clear recovery in the U.S.. including an improvement in the job market and the better than expected earnings results of U.S. companies.
Although the appreciation of the won would stabilize rising consumer price, there are growing concerns that it might harm exports, which has been the driving force behind Korea’s recent rapid economic growth.
More than 85 percent of export income is paid in U.S. dollars. The second largest foreign currency is the euro, which accounts for around 6 percent. “When the won appreciates over 1,100 won against the dollar, the psychological burden may affect exporters while the same situation will come as an opportunity for importers,” said Kim Jung-hoon, analyst at Korea Investment and Securities.
In a survey by the Korea Trade Insurance Corp., 51.3 percent of Korean exporters said they were exposed to foreign exchange risks, particularly among small and medium-sized companies.
But as conglomerates such as Samsung and Hyundai Motor are relocating plants overseas, they will be less affected by a strong won in the future, analysts said.
http://joongangdaily.joins.com/article/view.asp?aid=2931946
Won likely to strengthen to U.S. dollar
The won appreciated against the U.S. dollar for the third consecutive trading days as it edged close to the 1,100 won mark.
Analysts say it’s only a matter of time before the won breaks the 1,100 won barrier because of the bullish Seoul stock market and the fundamentally strong growth of the Korean economy.
The Korean won has remained above the 1,100 won mark for nearly two and half years. The last time it fell below 1,100 won was on Sept. 10, 2008, when the won closed at 1,095.50 won against the U.S. dollar.
The won yesterday closed at 1,140.70 won, 2.80 won lower than Monday. However, during the day it strengthened to 1,102.50 won.
“The won for an extensive period has been hovering around 1,120 won against the dollar but it could appreciate to 1,100 won this month,” said Lee Jin-woo, head of the NH Investment and Futures research center, in a report released yesterday.
Lee said further appreciation of the won is likely,as there is still room for the stock market to go up, triggered by the clear recovery in the U.S.. including an improvement in the job market and the better than expected earnings results of U.S. companies.
Although the appreciation of the won would stabilize rising consumer price, there are growing concerns that it might harm exports, which has been the driving force behind Korea’s recent rapid economic growth.
More than 85 percent of export income is paid in U.S. dollars. The second largest foreign currency is the euro, which accounts for around 6 percent. “When the won appreciates over 1,100 won against the dollar, the psychological burden may affect exporters while the same situation will come as an opportunity for importers,” said Kim Jung-hoon, analyst at Korea Investment and Securities.
In a survey by the Korea Trade Insurance Corp., 51.3 percent of Korean exporters said they were exposed to foreign exchange risks, particularly among small and medium-sized companies.
But as conglomerates such as Samsung and Hyundai Motor are relocating plants overseas, they will be less affected by a strong won in the future, analysts said.
http://joongangdaily.joins.com/article/view.asp?aid=2931946
