Korean won exchange rate to hover at 1,093 won to the dollar: KDI

The average exchange rate of the Korean won is expected to hover at 1,093 won to the dollar this year, a report by a state-run think tank showed Wednesday.

The Korea Development Institute (KDI) report said that the local currency should gain in value vis-a-vis the greenback on the strength of such developments as steady economic growth and favorable trade balance.

In 2010, the Korean legal tender traded at an average 1,157 won to the dollar, with the KDI expecting the won to appreciate in the coming years.

The think tank's estimate, based on findings released by Global Insight, also said the foreign exchange rate of the won will reach an average of 1,023 won to the dollar next year and reach 980 won to the dollar in 2014.

The latest findings, in addition, predicted that South Korea's short term three-month interest rate will stand at an average of 2.7 percent, with the long-term 10-year rate to reach 4.8 percent for the whole year.

Meanwhile, Global Insight said economic growth of newly emerging economies such as Taiwan, Hong Kong and Singapore will hover in the 4.2-4.7 percent range for this year. This is lower than the Seoul's growth target set at 5 percent.

The findings by the international market forecaster showed many developing economies may experience inflationary pressure in 2011 that could pose serious economic challenges.

It said consumer prices for China and Indonesia may rise by 3.8 percent and 5.8 percent, respectively, this year, with numbers for India and Russia jumping by more than 7 percent.

South Korea said it wants to control inflation at 3 percent for the year, although consumer prices gained a sharp 4.1 percent in January, mainly due to a surge in fresh food and energy-related prices. (Yonhap News)