KRW Falls as Government Cools Optimism

The South Korean won declined today against the U.S. dollar after rising for the whole week after the country’s government said that the current investors’ outlook for the economy are too optimistic.
The currency was in the uptrend this week as the markets have seen a serious decline in the risk-aversion. Despite the rising stock markets in the Asian region, the Forex market looks more pro-safety and less pro-yield today. The commentary made in the e-mail statement by the Ministry of Strategy and Finance pointed out the excess optimism in for the South Korean economy. Only a slightest increase in manufacturing and services is expected for March.
Some analysts also believe that the government’s action to cool down the traders’ optimism is a form of a currency intervention to prevent the won from appreciating too very fast as it has been doing recently. Weak currency is one of the advantages Korean companies have now and it would be better for the whole economy not to lose this advantage.
USD/KRW rose from 1329.6 to 1340.5 as of 6:00 GMT today. During the earlier trading it was down by 1.8 percent as the G20 countries pledged to spend $1 trillion to stimulate the global economy.

If you have any questions, comments or opinions regarding the South Korean Won,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published. Required fields are marked *