SEOUL– The South Korean currency rose by the most against the U.S. dollar in about one month on Monday as expectations that the Federal Reserve may slow its aggressive monetary tightening eased concerns about a global economic recession.
The local currency closed at 1,286.50 won against the greenback, up 11.70 won from the previous session.
It marked the highest daily increase since May 30, when the won rose 17.60 won per the dollar.
Financial market volatility has recently heightened over fears of the U.S. central bank’s aggressive rate hikes and a resulting global recession. The Korean currency on Thursday slid below 1,300 per dollar for the first time in nearly 13 years.
But the Korean currency rose for the second straight session Monday, as appetite for riskier assets revived on eased fears about a recession, analysts said.
U.S. consumer sentiment dipped to a record low in June, which prompted investors to reduce their bets of a 75-basis point rate hike by the Fed at its July meeting.
St. Louis Fed President James Bullard, known as having a hawkish policy stance, said Friday that concerns about a U.S. recession are overblown.
Earlier this month, the Fed raised its key rate by 0.75 percentage point — the sharpest hike since 1994 — to curb surging inflation and signaled it could raise the rate by the similar magnitude next month.
Seoul’s stocks also traded higher Monday on bargain hunting. The benchmark KOSPI rose 35.32 points, or 1.49 percent, to end at 2,401.92. Foreign investors snapped up a net 267.4 billion won (US$207.9 million) worth of local stocks.
South Korea’s foreign exchange authorities vowed efforts to stabilize the market, when needed, if market volatility increases.
Finance Minister Choo Kyung-ho said Sunday on a TV program that he does not think the won’s fall below 1,300 per dollar is seen as a sign of an economic crisis.
Source: Yonhap News Agency