South Korea's financial markets showed jitters Thursday morning on escalating concerns about the global recession.
The local currency was trading at 1,486.05 won to the greenback as of 9:27 a.m., down 39.55 won or 2.6 percent from Wednesday's close, after starting at 1,500 won.
Dealers said investors shunned risky assets due to growing concerns over a global recession, sparking strong demand for the dollar. The won has declined more than 35 percent to the dollar so far this year.
South Korea's main bourse tumbled below 1,000 points, weighed down by massive Wall Street losses Wednesday. The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 39.63 points to 977.19 in the first 15 minutes of trading.
U.S. stock markets nosedived Wednesday as growing concerns over economic deflation unnerved investors. The Dow Jones industrial average tumbled 5.07 percent and the tech-dominated Nasdaq composite index plunged 6.53 percent. It was the first time that the Dow closed below the 8,000-point mark since March 2003.
Despite a massive liquidity supply by the government and the central bank, South Korea's financial markets remained unstable as the impact of a global credit crisis began to spill over into the real economy, analysts said.
"Global economic recession woes sparked capital flights by foreign investors, deepening jitters in the local financial markets," Bae Min-keun, an economist at LG Economic Research Institute, was quoted as saying by Yonhap News.