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The Korea Times / November 9, 2004
By Kim Yon-se



Lowest in 50 Months





The won-dollar exchange rate Monday fell below the 1,110 mark, closing at 1,105.3 won, down 5.3 won from Friday's trading. This is the lowest in 50 months since the 1,104.4 reported on Sep. 4, 2000.

The fall is due mainly to the Japanese yen's ongoing appreciation to the dollar amid re-elected George W. Bush's weak dollar policy to recover the mounting external imbalances in the United States, according to foreign currency analysts.

The yen-dollar rate fell to 105.4 yen Monday, down from the 110 level in October. Many economists predict the won-dollar rate would eventually fall below 1,100 as part of the U.S. dollar correction versus Asian currencies.

``Now it is speculated the government will strongly defend the critical support level of 1,100 won per dollar,'' Woori Bank economist Lee Min-jae said.

He said it is up to Japanese policymakers' decision whether or not the won maintains its stronger position. He and other analysts forecast the won would not fall below 1,100 won unless the yen-dollar rate drops to the 103 level.

On the other hand, some analysts claim the appreciation of the local currency against the greenback will be led by fundamentals and the easing of intervention stance, not by the strong yen.

``A continued surge in the trade and current account surpluses linked to double-digit export growth and growing inflation pressures from rising commodity prices, especially crude oil, are two key fundamental forces to support the won appreciation,'' a Bank of Korea economist said.

Citigroup said a mild rise in the won-dollar rate might continue this week as a due correction from last week's steep decline, but the rate would eventually be capped by the dollar selling pressure from exporters.

The investment bank said it sees no special impact on the currency market from the result of the U.S. presidential election. ``This week's expected trading range is 1,110-1,125 won per greenback,'' it predicted.

After reaching 1,180.5 won on Jan. 26, the Korean currency has continued to gain strength this year, up around 75 won (with the won-dollar rate dropping) over the past 10 months.





A bank teller and a customer look at an electronic monitor tracking exchange rates as the won-dollar rate hovers around 1,100 won per greenback at a Chohung Bank branch in Seoul, Monday.



kys@koreatimes.co.kr