Won expected to lose more ground against dollar
By Kim Bo-eun
The won is expected to lose more ground against the dollar amid growing uncertainties propelled by the faster-than-expected spread of the novel coronavirus, according to analysts Friday.
The expectation came after the local currency closed at 1,209.2 won against the greenback Friday, up 10.5 won from the previous day following authorities' confirmation of Korea's first death that resulted from COVID-19.
The won-dollar exchange rate was the highest since Sept. 3 when it reached 1,215.6 over trade tensions between the U.S. and China.
Analysts attributed the strengthening U.S. dollar to investors seeking safer assets amid the spread of the deadly virus.
The depreciation of the won stems largely from forecasts that suggest the epidemic will cause global supply chains to collapse and deal a blow to businesses' earnings.
"Due to uncertainties posed by the coronavirus, the won-dollar rate could go up to the 1,220 won level previously seen in August last year, as investors flock to safe assets," Kim Yumi, an economist at Kiwoom Securities said.
Park Chong-hoon, head of economic research at Standard Chartered (SC) Bank Korea, said, “We expect the won to depreciate further, based on difficult circumstances the domestic economy faces.”
The SC Bank economist said the exchange rate could climb further, above last August's level, to 1,250. Yet Park anticipates the won may begin to strengthen by the second quarter.
At the same time Kim noted the upward pressure on the rate may be limited by expectations of measures to stimulate the economy.
"The more the economy is affected by the coronavirus, expectations will grow over stimulus measures taken by the government," she said. "This would curb a rise in the exchange rate."
Meanwhile, gold prices also soared to the highest level in seven years, due to the outbreak.
According to the gold bourse of the Korea Exchange (KRX), one gram of gold was traded at 62,860 won at closing, Friday, up 2.21 percent from the previous day. This is the highest price since the KRX gold bourse opened in March 2014. The price has continued on an upward trajectory for five consecutive days since Feb. 17.
The KOSPI closed at 2,162.84 Friday, down 32.66 points or 1.49 percent from a day earlier. The KOSDAQ fell by 13.67 points, or 2.01 percent to end at 667.99.