By Na Jeong-ju
Staff Reporter
The won fell to its weakest point in 30 months against the U.S. dollar, Thursday, as more investors turned to safer assets amid rising crude oil prices and the uncertain outlook for the Korean economy.
The Korean currency shed 23.5 won to close at 1,049.6 won per dollar, its weakest level since Oct. 25 in 2005 when the rate stood at 1,055 won. The won has fallen for the seventh consecutive session.
Currency dealers forecast the won will continue to lose ground for the time being amid the greenback's global strength. Policymakers have also indicated that they will support a weaker won to address growing travel account deficits and to prop up an economic recovery.
``Korean exporters and foreign investors here increased their dollar holdings amid forecast of a further fall of the local currency,'' a KEB dealer said.
The won's fall will put upward pressure on consumer prices.
Analysts said a weaker won will raise import costs for Korean firms amid rising international prices of crude oil and other raw materials. On Thursday, Bank of Korea Governor Lee Seong-tae cited the won's sharp fall as one of the key drivers of inflation growth.
``Capital outflow from the Korean market is expected to become stronger as investors move to withdraw their investments to pay off their debts, or to relocate their global investments,'' said Shin Min-young of the LG Economic Research Institute.
Government officials, however, have raised concerns about worsening current account balance, saying the country should avoid a strong won to ease the problem.
``We are trying to find ways to ease currency account deficit,'' Vice Minister of Strategy and Finance Choi Joong-kyung said Thursday. ``The won's fall is a result of trading by market participants. It is a natural phenomenon.''