The South Korean currency tumbled against the U.S. dollar on deepening financial woes following the collapse of Lehman Brothers Holdings, the fourth-largest U.S. investment bank.
The won traded at 1,139.85 won to the dollar as of 10:04 a.m., down 30.75 won from Friday's close. South Korea's financial market was closed Monday for the Chuseok holidays.
Financial authorities expressed concerns over currency market volatility in a verbal intervention. Choi Jong-ku, head of the finance ministry's international financial bureau, said the won's slide was so "excessive" that it could lead to drastic market corrections.
A weaker won might add upward pressure to the nation's already high inflation by making crude oil and other imports more expensive. The won has lost more than 20 percent against the greenback so far this year.
"Lehman's bankruptcy sent shock waves across the financial sector, amplifying market uncertainty," Yonhap News quoted Oh Suk-tae, an economist at Citibank Korea, as saying. "The depth of its impact cannot be fully assessed at this moment, but the won will not likely fall back to the previous record low of 1,155 as the government is expected to intervene to defend the level."
On Monday, the 158-year-old Lehman filed for bankruptcy, burdened by $60 billion in soured real estate holdings.
Lehman has strived in vain to find partners able to provide a lifeline following the worst global credit crunch in decades. South Korea's state-run Korea Development Bank recently withdrew its bid to buy the embattled investment bank.