The Korean won slumped to a fresh nine-month low against the U.S. dollar Thursday on sound economic data from the U.S. and speculation that currency authorities here may intervene to control the pace of the local currency's sharp ascent against the Japanese yen.
The won finished at 1,083.80 to the greenback, down 0.2 won from the previous session's close, marking the lowest since Feb. 3 when the comparable figure was 1,084.50. The local currency hit an intra-day low of 1,096.80 won at one point, but pared most of its earlier losses, moving in tandem with the yen which slightly rose against the dollar in late afternoon.
The Japanese yen still hovers around a seven-year low against the greenback as robust job data from the U.S. supported the dollar's rally and the Bank of Japan vowed to fight deflation by coming up with additional measures if necessary following last
week's further monetary easing step.
The won-yen exchange rate reached a six-year high of 946.69 as of 4:15 p.m., up 2.54 won from the previous session's end.
"The yen will continue to remain weak, and they (local currency authorities) need to reduce currency volatility through fine-tuned moves," said Lee Jun-hyup, a researcher at Hyundai Research Institute.
South Korean currency authorities are increasingly coming under pressure to take action as the yen continues to slide.
South Korean exporters compete directly with Japanese rivals in overseas markets in products ranging from electronics to automobiles.
Earlier in the day, South Korean Vice Finance Minister Joo Hyung-hwan told lawmakers that the government will let the won move in sync with the Japanese yen, signaling that the currency authorities may intervene if the won's rise to the yen turns excessive.
President Park Geun-hye and policymakers have voiced their concerns over the won's strength against the yen, which could lower local exporters' competitiveness in overseas markets.
Last week, the Bank of Korea also voiced concerns over the yen's slide, saying that it will keep close tabs on the impact of the additional easing on South Korea's economy and financial market.
Data from the U.S. showed that the U.S. economy is on a recovery track with its private sector creating 230,000 jobs in October, more than the market-estimated 220,000 jobs, raising the possibility that the closely watched October non-farm payrolls data due out Friday will also be better than expected.
The Federal Reserve is moving closer to its first interest rate increase in eight years after finishing its bond-purchasing scheme last month, citing an improving job market.
"A Republican Party victory in the U.S. mid-term elections would spur speculation that the Fed will move fast to raise the rate, which would further underpin the dollar," Shinhan Bank said in a research note. (Yonhap)
