The South Korean won gained today against the US dollar as the nation’s economy expanded and general sentiment on the Forex market was rather positive for higher-yielding currencies of emerging markets. Yet there are downside risks for the currency. The won closed flat versus the euro.
South Korea’s gross domestic product grew 0.9 percent in the first quarter of this year from the previous three months, matching the Bank of Korea’s April forecast. That was the fastest growth in a year. The benchmark Kospi stock index added as much as 1.1 percent. There were other positive fundamentals that supported the won.
Nevertheless, market analysts are concerned that the sovereign-debt crisis in Europe may hurt South Korea’s economy and currency. Kim Nam Hyun, a fixed income analyst at Eugene Investment & Futures in Seoul, explained:
Whatâs happening in Greece and Spain threatens an economic recovery here. All BoK board members will vote for no rate change this week, opting to wait and see how the euro-zone debt crisis unfolds.
The South Korean central bank reduced its growth forecast for this year from 3.7 percent to 3.5 percent on April 16.
USD/KRW closed at 1164.90 today after opening at 1174.55. EUR/KRW opened at 1468.65 and closed a little higher at 1469.35, while the intraday maximum was at 1477.95.
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