Won Rises to 5-Week High Against Dollar
By Kim Tae-gyu
Staff Reporter
The won-dollar exchange rate plunged below the psychologically important 1,400 level Thursday for the first time in about five weeks thanks to the weak dollar across the world.
The Korean won appreciated 1.79 percent against the greenback to close at 1,396 won. The exchange rate was the lowest since Feb. 12.
``The dollar lost its value against most of the main currencies as the Federal Reserve is to snap up bonds to channel dollars into the market,'' SK Securities economist Kim Young-jun said.
``The extra supply of the greenback eased people's fetish on the safe asset ― the dollar. Many observers predict that the weak dollar era might open up,'' Kim said.
The Federal Reserve plans to buy up to $300 billion in U.S. bonds down the road, which instantly caused the dollar to tumble.
The dollar Index, which tracks the U.S. dollar's value against six other currencies, plummeted 2.7 percent overnight to 84.595, marking the biggest one-day drop since 1971.
The won started on a very strong note as the currency appreciated up to 2.9 percent in the morning session. However, it lost ground somewhat in the afternoon.
Before stabilizing at below 1,400, the won stayed weak against the dollar over the past month. The rate once closed at as high as 1,570.3 won March 5.
In comparison to the strong foreign exchange market, the Seoul bourse slumped as the benchmark KOSPI edged down 8.14 points, or 0.7 percent, to close at 1,161.81. The junior Kosdaq also inched down 4.66, or 1.17 percent, to 393.94.
``Institutional investors sold off shares to take profits even through foreign players were in a buying mode,'' a Seoul analyst said.
Institutions posted net selling amounting to 135.3 billion won and overseas investors netted 46.2 billion won in purchases.
Market bellwether Samsung Electronics crept up 0.19 percent to 541,000 won but rival LG Electronics shed 5.41 percent to finish at 84,000 won.
The country's predominant fixed-line operator, KT, advanced 3.63 percent to 40,000 won after getting approval for a merger with its mobile arm KTF, the No. 2 wireless carrier, late Wednesday.
A total of 525.6 million shares changed hands worth 5.51 trillion won. Losers outpaced winners 441 to 364, with two shares reaching the daily down limit of 15 percent.