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The Seoul stock market plunged to a two-year low and the won plummeted to a decade low against the dollar, driving Korea's financial market into chaos.

The Korean won closed at 1,395 won to the dollar Wednesday, down 66.9 won from the previous day, and the lowest level since Sept. 23, 1998.

It started trading at 1,335 won, but massive buying of dollars pushed it up to 1,399 won.

Foreign investors selling stocks, coupled with the current account deficit, is pulling the value of the Korean currency, which has dropped 208 won against the greenback in four days. Foreigners have sold $33 billion in stocks so far this year, and the trade account is recording a $14.2 billion deficit. Concern over an economic slump is adding to a pessimistic outlook on the won. The rattled global financial markets, despite the bailout packages by the United States, is causing demand for liquidity in dollars ― considered a safety asset.

Market experts are showing concern as the won has lost over 40 percent of its value against dollar this year. In contrast, the yen, yuan and euro have strengthened against the greenback, while other Asian currencies such as those of Taiwan, Hong Kong, and Indonesia have changed little in value.

By By Yoon Ja-young(Staff Reporter)



# The Korea Times [Oct 9, 2008]